2009 may just go down in the record books as “the year of the foreclosure” for homeowners across the country and it doesn’t look like things are going to improve any time soon. The number of foreclosures hit record highs by the midsummer at over one million foreclosures being filed at that time.
The concern felt by many in the housing industry at this time is that almost a quarter of the home loans across the country are underwater at this time and another wave of foreclosures is likely to be the result in the months to come. When lenders are owed more than the homes that are borrowed against are worth, then there is an increased possibility that home owners are going to stop paying their mortgages or just walk away from their homes. Owing more than your home is worth can be a very discouraging reality to face, particularly if your payments have gone up or if you have lost some or all of your income during the recession.
Another rise in foreclosures can have serious consequences to an already labored real estate market and related industries. Not only will another wave of foreclosures add devalued stock to the real estate market but may well also set back the recovery of the construction industry as well; more homes on the market will equate less homes needing to be built. A boost to the construction industry would help support the recovering economy.
It seems like there are many factors right now that are causing a myriad of problems across the board for home owners beyond just the number of underwater loans. Many home owners are having problems getting their mortgages modified so that they are more affordable while others are struggling with toxic drywall and canceled insurance policies that have resulted from that fiasco. All of these factors add up to some pretty big headaches for homeowners across the country.
It’s looking more and more like there isn’t going to be a huge upturn in the real estate market until some of these problems are resolved and confidence in the real estate market can heal. The industries that are reliant on strong home sales, renovations, and home building may well take longer to recover. It is possible that home building will not see another boom like they have experienced in the recent past however, at least not for quite some time; we will be feeling this recession for quite some time most likely.
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