Swift Changes Could Occur

Change is about to happen again in the Real Estate Market. We have seen our 3rd or 4th attempt at Obama’s Loan Modification efforts and they were absolute failures. Now they are finally going for Short Sales under the new “Home Affordable Foreclosure Alternatives Program” (HAFA).

This type of program, had it been implemented 3 years ago, would have cut the damage brought on by foreclosures by half. That’s right! The decline in home prices would have been half of the losses incurred.

Will the new HAFA Short Sale Program work now? It’s the best of all the alternatives available.

But new changes in how people look at home ownership have emerged. Approximately 25% of homeowners, 60 days late or more, can afford the payment but choose not to make the payment because they figure it’s a bad economic decision. These people make that decision based on the value of the home being so upside down in comparison to the amount owed on the home. If that concept gets legs, we could see another new wave of foreclosures and short sales that many have yet to recognize as a real possibility.

The banks made bad economic decisions in the “Boom” times and the government bailed them out. Now the home owner is holding the payment book and the only bail out they see is having their life disrupted by having to relocate, plus, deal with their new lower credit score as they try to start anew.

Housing prices appear to be finding some stability at the moment.

My advice is watch closely for indicators in the market place. Interest rates, unemployment, the number of short sales, foreclosures, and the loss of Tax Credits and a new way of thinking about home ownership could cause a swift change in housing.