Existing Home Sales Down
According to the National Association of REALTORS® existing-home sales are likely to decline in coming months as the mortgage crunch is expected to continue. The mortgage crunch was created by sub-prime lending that has led to record foreclosures causing many investors to withdraw from funding the mortgage market.
The Pending Home Sales Index that is based on contracts executed in July of this year was 16.1 percent lower than July 2006. The 16.1 percent was a National average with the western states taking the biggest hit with existing-home sales down an unprecedented 21.8 percent from last July.
The stock market has also been taking it on the chin with record loses that can be attributed directly to the housing markets downward trend. While the stock market saw modest gains after President Bush’s news conference last week I heard little that gave me any hope for relief.
The President offered a possible plan of assistance for distressed homeowners to receive refinancing assistance from the government IF they had good credit. Since most homeowners adversely affected by the sub-prime mortgages did not have good credit to begin with, it is doubtful that many would qualify for the government assistance. Additionally, anyone facing foreclosure has already had an adverse impact on any credit rating.
The President did state that unscrupulous predatory lenders would be dealt with harshly. This combined with a plea by the President for lenders to work with distressed homeowners to avoid foreclosures should serve as a warning to most lenders that created this sub-prime debacle to work with their borrowers.
With sub-prime mortgages being such a small percentage of home loans currently and with the fact that 85 percent of these borrowers remaining current on their loans, it continues to be perception and lack of confidence by consumers that has driven this market to levels that are clearly not substantiated by the figures. This self fulfilling prophecy of the “Real Estate Bubble” bursting by the liberal media continues to fuel this industry quandary.
~Rhonda McMillan
Broker
