Job Losses Rise, Home Prices Fall as Foreclosures Rise
December 16th, 2008 by 
Joseph Smith
Largely as a result of the continued decline of the housing market and flood of foreclosures, the nationwide unemployment rate has increased from 6.5 percent in October to 6.7 percent in November, the highest rate in 15 years. According to the Labor Department, employers in the private sector eliminated 533,000 jobs during the month of November, the highest number in 34 years. Most of the job losses were in the manufacturing, construction, financial, retail, leisure and hospitality industries.
Despite the decrease in mortgage rates and home prices, homebuyers and real estate investors are still hesitant in looking at opportunities in the housing market. According to analyst Nancy Vanden Houten of Stone & McCarthy Research Associates in New Jersey, mortgage rate reduction is not enough to revitalize the housing market.
She said that a focused effort must be done to tackle the foreclosure problem so that the housing market could reach its bottom and then starts to climb up. She said that bankruptcy courts and mortgage services must be allowed by new legislation to modify the mortgage terms for foreclosed properties or homes at risk of foreclosure.
Home loan refinancing schemes have not been implemented by mortgage lenders and have not been applied for by troubled homeowners because of the drastic fall in the value of their homes. Home values have declined to a level lower than their mortgage values, forcing homeowners to choose foreclosure over refinancing.
Nonetheless, according to Brad Sherman of Nationwide Mortgage Services in Maryland, there are people, such as renting families with good credit ratings, who can take advantage of low home prices, low mortgage rates and high number of repo homes in the market. He cited a couple whose home loan interest was reduced by 1.25 percent from the rate written in the sales document that they signed, cutting their monthly amortizations to a very affordable level.
