The downward spiral of the housing market has left many people more than a little disheartened.
Despite the hopes of the market rising again soon, it is expected to take another turn for the worst. The downward trek of the housing market has been said to be the worst since the Great Depression, hitting the economy almost as hard as the recession itself.
The failure of businesses, declines in consumer wealth and significant declines in economic activity resulted in the recession America is now experiencing. With the housing market also taking a dive, the economy is now suffering even more.
The cause for the decline in the housing market is mostly due to foreclosures. A foreclosure is a circumstance in which a homeowner cannot make the principal or interest payments on their mortgage. This means that the lender (a bank) can seize the property and sell it under the terms of the mortgage contract.
The banks also raised their interest rates which prevented some people from obtaining the loans they need to buy a house even if they are well-qualified.
Another reason for the decline was due to those home buyers who were “underwater.” This meant that the owners owed more money in loans then their house was worth.
The market did take off recently as buyers rushed to take advantage of the first-time home buyer tax credit, which was put in place by the government in November.
The plan extended the $8,000 first-time buyers, added $6,500 in credit for previous home owners buying a new house and increased income limits. Those eligible to borrow have to sign contracts by April 30 and close the loan by June 30.
Wake County has also been hit by this decline in the housing market.
Although the county is slowly coming out of the decline, the job market may hinder its improvement.
Those who were looking for a house and suddenly lost their job or received a pay cut usually stop looking for a new place to live and instead focus on their job issues; once the job market picks up again, than the housing market should make a drastic improvement.
Economists hope that foreclosures sales will die down sometime this year and the market will rise again. But until then, it will continue to suffer.