Economic woes, pending foreclosures could threaten housing market growth

Although the housing market gained considerable momentum so far this year, there are a number of factors that could hinder the real estate industry's recovery in the near future.

Although the housing market gained considerable momentum so far this year, there are a number of factors that could hinder the real estate industry's recovery in the near future.

The impending fiscal cliff, which could throw the economy and housing market into a tailspin if not resolved, is one such factor worrying many real estate experts, according to a report from Barclays Securitized Products Research. The fiscal cliff would usher in spending cuts that currently help stimulate the economy if lawmakers can't come to an agreement on the future of the federal budget.

Should the timeframe to come to an agreement come and go, some financial institutions could implement much stricter lending regulations, which could hinder the ability for countless borrowers to qualify for mortgages.

National shadow inventory also a concern
However, this isn't the only factor which could threaten the housing market's recovery in the coming months. In addition, the national shadow inventory, which includes distressed homes in some stage of the foreclosure process and properties that have been repossessed but are not yet on the market, may have a damaging impact on home prices in 2013.

Although a sudden influx of these types of properties likely won't have a major effect on national home prices, it could damage real estate recovery efforts in many local areas still struggling to fund their footing in the wake of the housing market collapse.

"We are particularly optimistic on prices in areas where homes are trading below replacement values and household formation is positive," the report said.

Property data indicates home prices appreciated significantly so far this year, and if the previously mention development take place, this could hinder the momentum built toward a real estate recovery.

With mortgage rates currently hovering near all-time lows, a number of prospective borrowers could recognize the development taking place in housing and the government and opt to make the transition to homeownership sooner, rather than later.

Although the real estate industry is in its slow season, buyers and sellers interest could remain elevated in the near future, as many of them continue to obtain financial safety and soundness to make major investments, such as purchasing property.



blog comments powered by Disqus