Not that real estate agents and brokers needed any more bad news, but the latest report on the national housing market projects a 2.5% drop in home prices this year that will rise to just one percent annually through 2015.
If the opinions of more than 100 economists surveyed by MacroMarkets LLC turn out to be true, the housing market is looking at a “lost decade” in which homeowners never recapture the equity they lost between 2005 and 2015.
What does this mean for real estate agents and brokers? The answer is not good, according to a story on the survey in The Wall Street Journal:
While home prices aren’t falling at anywhere near the pace of 2008, one worry is that even modest declines become self-reinforcing, pushing more homeowners underwater and exacerbating the downdraft caused by more foreclosures.
That, in turn, could prompt more credit tightening by lenders, further shrinking the pool of home buyers when more are needed to purchase bank-owned foreclosures.
As we’ve discussed previously, the housing bust is making it extremely difficult for the economy to rebound in part because it brought the giant job-creating real estate industry to a screeching halt.
What’s the answer to bringing back the housing market, and in turn, opportunities for agents and brokers to turn their fortunes around?
The story points to a solution. While mortgage rates are at their lowest in decades, purchases are still near 15-year lows. This is mostly due to “a mountain of paperwork and never-ending reverifications,” according to one home builder.
It’s the pendulum swinging too far yet again. After the subprime mortgage fiasco, the feds and banks are now making it ridiculously difficult for buyers to qualify for a mortgage these days.
But we all know the economy needs the recovering housing market to give it a boost. So why don’t the banks and federal government help the real estate industry get things back on track and make mortgages somewhat easier to acquire?
RE-Insider would love to know your thoughts.