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Positive Thinking about out market

By
Real Estate Agent with Dunes Properties of Charleston

"Impending Foreclosures Cast Shadow Over Housing Recovery‎"

"New round of foreclosures looms in US‎"

All I had to do was google foreclosure and it appears like the end of the world is coming.

There seems to be an abundance of doom and gloomers lurking around, and not just from the media.  Look over the last couple of days posts and see how many are related to Chicken Little.  One such blog caught my attention and I decided to list the top 5 reasons I am thinking positively and questioning these catastrophic claims.

#1)  Resets on adjustable rate loans may be a softer blow than expected.  When I hear about all these loans that are due to reset, I have to wonder where they are getting these figures from?  Are they counting originations from a certain past period?  Is it possible that many of these loans have been refinanced, sold, or already foreclosed?  They say that prime mortgage resets are the next shoe to fall, but is it possible that because of lower interest rates, these resets could actually cause homeowners' payments to go down?

#2)  Federal monetary policy will continue to do what it can to protect us from the implosion of the housing market.  This discussion and it's merits can take on a life of it's own (different topic altogether) but I can assure you that the government will do everything they can to keep interest rates down and incentify lenders to modify loans and accept market-price offers.  This is a touchy subject but I believe it can be done well if managed correctlyThis is why it is SO important to get involved and educate yourself on what is being done with taxpayer money.

#3)  Banks are going to have to wisen up.  They have much more to lose than most homeowners, literally.  They were the ones actually purchasing the home and then allowing the owners name to be on the deed.  They are currently taking a hard stance, but at some point they must break down just like any other seller who realizes that the best offer is the one on the table.

#4)  Foreclosure rate is actually not that high.  This one will probably get me the most comments calling me crazy, BUT, take a look at the graph in the blog page by Jeff Geoghan.  The foreclosure rate is around 3%  My question is, didn't lenders have some sort of allowance for foreclosures when they began lending.  I am sure they didn't think 100% of the people would pay them back.  So although it is at historic highs, 3% shouldn't be too far off from what they predicted.  ALSO, they are still collecting from 97% of the people and these payments are revenue streams to lenders.  They may not be making as much profit as the did in the hey-day, but it still seems like a profitable arrangement to me.

#5)  People are realizing that it may be time to dig in and stay put.  Most people have heard the news about the economy.  If you have not done a financial overhaul of your situation by now, your head is buried in the sand.  Homeowners who value their credit and live up to promises made (who I believe are the majority) will do whatever it takes to keep their home and accept that they may be in this house longer than expected.  Considering many of the horror stories we here about people losing their homes, this option is not all that bad.

I hope I am right, and with some positive thinking maybe we can shift this mindset of the future home market being in the tank and get some real progress started.  Instead of predicting the future with apocolyptic certainty, lets work on solutions to protect it.