Though there has been stabilization in the housing market over recent months, many forecasters are predicting prices will decline throughout 2010. This makes for somber reading for many of course, but is not a surprising development.
The signs are there for everybody to see, and while recoveries have been made, these point to issues in the immediate future. Heading up the list of issues are an increase in foreclosures; but there are also concerns in regards to heightened interest rates and the cessation of tax credits.
Though foreclosures are already at a significant level, there are likely to be increases for a host of issues. Mortgage modification programs have not been as successful as hoped, and borrowers are again defaulting. That these will be at higher rates will compound the issue.
There is also the problem with ARMs (adjustable rate mortgages), which are set to transfer over to fully amortizing mortgages. This will invoke higher monthly payments; thus defaulting levels will rise again.
Even in the usually strong fixed rate mortgages, problems are on the horizon. As house prices continue to be less than that of the money being paid back; many responsible owners are considering defaulting to better manage finances.
The housing market will also be affected by constantly rising interest rates, and a greater impact will be felt from this, above all else perhaps. This will be impacted in a large way by Federal support being cut back in March.
Another Federal hit will come in April; as tax credits end. Initially, this was a successful initiative, but the impact of its withdrawal is likely to be severe. Again new buyers, always the lifeblood of a burgeoning housing market, will be hit hard.
However, this may well lead to a false boost to housing market prices; with a rush to complete sales before the deadline. Forecasters have proven unpredictable throughout the financial issues of the past few years; though such speculation here looks sound.
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