Positive Signs in Foreclosure Crisis

Posted on August 21st, 2009 by Samanta Parks

positive signs foreclosure crisis

Larry Fink, CEO Manager of the Blackrock fund, shows that the situation reflects the ability of banks of taking advantage of the competition’s reduction. There are signals for settling down the immovable/real sector in the U.S.A. Prices of the houses from 20 big American cities decreased in May under the analysts’ estimates, indicating a settle down of the immovable property from the USA. The S & P / Case-Sheller index has decreased with 17.1% in May, in annual terms, marking the smallest decline from the last nine months, after a decline of 18.1% in April. Bloomberg writes that the prices’ decline could continue to moderate if the application stabilizes.

However, the unemployment’s increasing and the low confidence in economic returns indicate a gradual recovery of American real estate sector, seriously affected by crisis. Economists took a flutter on a 17.9% decrease of the index. In monthly terms, foreclosures’ prices decreased with 0.5% in May. There have been recorded decreases of prices in all the 20 American metropolises, the most visible being in Phoenix (-34%) and Las Vegas (-32%). Dallas recorded the smallest decrease, of only 4.1%. Home sales have increased in June with an annual rhythm of 384,000, according to data presented Monday by the Commerce Department, in increasing with 11% compared to May. Therefore there are positive signs in USA, the origin country of the real estate crisis.

The close control of the retail market’s situation from United States is essential for the forecasting of positive and negative evolution of the real estate property on other capital markets. This is valid in the case in which the U.S. is a country of the foreclosures crisis’s origin and it has in the same time, the largest economy in the world. Although the U.S. sales have constantly decreased in the last 2 years, February marked the beginning of a slight improvement of the situation, concerning both the new and old properties’ sales. Therefore in some areas of the American land foreclosures sales have exploded due to the unexpected decrease of prices, and it ranks among these Florida, California and Minneapolis, where it have been recorded increasing of 90% of the real estate transactions, on the prices’ decrease by more than 40%, informs the official site of the National Association Realtor.

Related to the situation of financial institutions, U.S. Federal Reserve (FED) has lowered the interest of reference to 0%, which resulted at a significant decrease of interests at the mortgage loans. Currently, the interest rate for the over 30 year’s loans came to a historic minimum, that is under 0.5%. Never in history was a loan on mortgage cheaper. For comparison, during the 1983s crisis, the interest rate was over 18%.

The Evolution of loans of mortgage’s applications in the U.S. is emphasized by an index called "Mortgage market composite index”. For instance in April 2008, this index had a value of 746.2 points. A year later (April 2009), the index increased at 1250.6 points, evolution that indicates an increasing of 67%. This shows the fact that more and more Americans want to contract a loan on mortgage.