Measuring the Measuring Sticks

Housing Forecast Changes with Each Report
According to data recently released by Neighbor Works, the number of homeowners identifying unemployment as the main cause for losing their homes has risen from 40% to 65% in the course of the past year. The battleground has shifted somewhat from the lenders to the employers and (therefore) the overall economy.

As a result, various analysts are measuring recovery in different ways. Some have pointed to stabilizing house prices and increased demand for loans. This paired with tax incentives has led to increasing optimism amongst many. On the other side, though, there are those who view the year-over-year numbers as weak and the stability as temporary. They expect to see unemployment-driven foreclosures spill into a period of adjusted-rate mortgage foreclosures. After that, who knows, they say.

One thing that never changes is that money ultimately determines how markets do. If mortgage rates are too high or banks continue their stranglehold on credit, there will not be enough buyers available to wipe out the ample selling demand. If the economy experiences slight growth as expected in the second half of the year, though, the unemployment factor could be mitigated.

Uvestor Opportunity:
The unemployment figures are real. 10% is probably the number for the rest of the year, so that (along with some housing price issues) will create a certain number of foreclosure opportunities. The plunging home prices are a given at this point for cities like Las Vegas and Phoenix, but other cities like Chicago and Atlanta are starting to show up on the radar, as well.

Foreclosures are likely to remain a strong one-third to one-half of the buying activity in the coming months. Federal programs and a stabilizing market will have only so much effect in the next little while. With the right funding and in the right locations, it remains a very good time to buy.