Housing Market Situation Spiraling Out of Control
May 29th, 2008 by 
Joseph Smith
While the housing market and foreclosure crisis has been going on for years now, experts and economist are beginning to really fear that things could get much worse before they start to get any better. The sheer proportions of the foreclosure situation, which has seen the rate of foreclosure surge by 65% in the past year, are leading many to predict that the worst won’t be over until 2010.
All signs are pointing to the fact that there seems to be no immediate solution to the problem, as a variety of factors are contributing to it, and as each spirals more out of control, the harder it becomes to fix anything. The housing collapse is due to high foreclosures and loan defaults, which contributes to falling property values. This leads to a bigger and bigger supply of homes for sale, as falling property values leads to less competition, and with demand low due to the sluggish economy, property values sink lower. To make matters worse, loan defaults and foreclosures have led to much together lending regulations for banks, making it harder for people to even get loans to buy up the surplus of homes.
Experts agree that home sales are the key to slowing the trend. Luckily, statistics show interest rising in the surplus of home foreclosures currently for sale. Since these properties offer extremely low price, below even currently devalues market prices, most home purchases in the hardest hit areas are of foreclosures. Despite low federal interest rates, people are not being as readily approved for loans, which also leads to people pursuing foreclosures. Before home sales on the open market can pick up and homes begin to have value again, the foreclosure inventory is going to need to be reduced, and the rate of new foreclosure homes slowed.
But in the end, policy is what many economists will help to really right the problem.
