Unemployment Remains A Factor
According to a statement by House Financial Services Committee Chairman Barney Frank, Congress may funnel the $2 billion repaid by lenders to programs that would assist unemployed Americans in danger of foreclosure. Also, TARP is expected to continue beyond its original December expiration, partially in response to disappointingly high unemployment figures from last month.
Meanwhile, the Associated Press monthly analysis of economic stress, which examines more than 3,100 counties throughout the United States, improved slightly in August, but when compared with a year ago, the picture is dreadful. Six times as many counties (39% total) are considered economically stressed.
Shall we dare to mention the bad loans, as well? There are quite a few Option ARMs and Alt-A loans out there, dangling precariously in the distance. No one is really sure when those will be felt the most, but it probably will happen in the next year.
Foreclosures affect everything. They will keep overall prices from ballooning very far from current levels by adding inventory (and not always preferred inventory, at that). They will stress banks and prevent the further loosening of credit that greases the market in all directions. Obviously, new starts will remain down, too.
Many places are recovering, though. Jobless rates have improved recently in states like Colorado and South Carolina. And some places have remained relatively free from the drama of the national housing crisis. Prices are beginning to inch up, and housing signs are favorable. Know your own market and how it is performing.
Also, don't expect every market to recover at the same pace. It may take Las Vegas and South Florida a lot longer to cycle through their neighborhood messes. If you are inclined to invest there, a lot of deals are yet to hit the street.
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