Challenges remain in the housing market

Along with the overall economy, the outlook for housing has finally brightened! Extended and expanded home buyer tax credits have already shown signs of boosting the housing market. However, the National Association of Home Builders predicted in last week’s Eye on the Economy e-newsletter that four key challenges will continue to put a strain on recovery in 2010.

  1. Weak job market – The fact is, our still-weak job market makes it difficult for potential home buyers to make the required downpayments, which are still quite high. Not to mention, you still need nearly-perfect credit to get a reasonable mortgage. High unemployment will continue to fuel foreclosures.
  2. Loan difficulties – Some builders are still struggling with recent changes to terms of existing loans, such as reduction in credit and demands for increased equity or even full repayment. They also continue to face trouble when trying to obtain loans to build.
  3. Inaccurate appraisals – When appraisers compare properties in dissimilar neighborhoods or don’t make the proper adjustments for differences in the conditions of homes, the inaccuracy in their figures hinders the housing recovery.
  4. Foreclosures – Most foreclosures and past-due mortgages remain in the formerly hot markets. In the third quarter of last year, the Mortgage Bankers Association found that Nevada, Florida, Arizona, California and Michigan accounted for 48 percent of all foreclosures started in the U.S.

So, get out there and buy a house while they’re cheap, but make sure you can pay for it! Nah really, if you are thinking about it, definitely check out to learn about the $8,000 first-time home buyer and $6,500 move-up / repeat home buyer tax credits available until April 30.

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