2009: Another Bad Year for Real Estate due to Foreclosures

House prices continued to drop significantly across the country, compounded by the turmoil of the current financial crisis. Unemployment and delinquencies in mortgage payments plagued middle-income Americans, resulting to foreclosures in homes and properties. Such scenario would persist until next year, as experts predicted a pitiable new year for the real estate industry.

Beleaguered banks continue to charge high interest rates even for customers with good credit standing and larger equities. This makes acquisition of new mortgages even harder, despite government conservatorship of both the Federal National Mortgage Association (FNMA), more commonly known as Fannie Mae, and the Federal Home Loan Mortgage Corporation (FHLMC) or Freddie Mac. An increasing trend of foreclosure properties triggered this decisive intervention by the government to try and salvage the mortgage market.

With high rates not expected to come down soon, at least 18.6 million houses remain idle across the country. This will be compounded by the fact that at least 2.8% of mortgage loans in the US are delinquent for more than 3 month in arrears. This is higher than 1.4% from the previous year and is expected to continue rising. This is feared to trigger a new round of foreclosures for the coming year.

With a nationwide price drop of up to 20% for home prices, experts say that this will continue to repeat until next year, from 15% to 20%. With this bleak trend, economists fear that other cities, which remained unaffected by the current crisis, may not escape unscathed next year. A threat of foreclosures looms in the horizon for these cities, including New York.

Home values continue to fall, which experts say may not shift direction until the later months of next year. This will put investors at risk and might consider putting their homes up for rent, in a bid to thwart possible foreclosures.

The only hope in the horizon for these homes would be for bargain hunters to come and shop for foreclosed homes which may help bring the industry back on its feet and put prices back to competitive and profitable levels.

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