Rise in existing home sales spur positive outlook- By: Rudson Tren
The latest survey by the National Association of Realtors shows a positive increase in existing home sales for the month of September. This could show that market improvements are underway and that the housing industry could be recovering from dismal figures.
Although the recovery could be marking improvements in the housing sector, still, its sustainability will depend on how the foreclosure moratorium will impact the market. But home sales figures are already indicating an overall increase, mainly due to unprecedented low mortgage rates and home affordability.
Low interest rates are believed to be reviving the market, which remains 50 percent below than what they were over 10 years ago. Lower home prices, which are about 22 percent less than the previous years, are also spurring the growth in house sales. With the increasing number of cheap and affordable homes, it is now easier for the average homeowner to buy a house and meet their mortgage payments.
But low home prices have been attributed to the ownership issues linked with sloppy paperwork by servicers and mortgage firms. The Obama administration fears that questions surrounding the legal status of foreclosed homes could further drive down market prices and forestall market recovery.
Distressed homes make up 35% of home sales in September compared to 29 percent last year.
According to the government’s Troubled Asset Relief Program, about 5.5 million homes are subject to foreclosure postings with more than 1.7 million homeowners succumbing to home seizures since January 2009.
The Federal Reserve had expressed concerns over reports of irregularities in foreclosure proceedings among large financial institutions, stressing that there is a need for banks to hold reviews of their internal controls and foreclosure policies. The federal banking agencies are also putting in more efforts in reviewing the practices of large mortgage firms and determining the weaknesses in the banking system that might have led to unjustified foreclosures.
These efforts are projected to restore consumer confidence in the market, which is said to be suffering from recent intrigues in the mortgage industry.
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