Will Foreclosures Resolutions Repeat?

Posted on March 16th, 2009 by saman

It seems that foreclosures prices will be in a continual decrease on the market of the United States next years, so that some parts of it will reach even 30% in declining, as Moody’s company, based on financial rating, revealed in a report edited on Economy.com. The document, whose authors are Mark Zandi, chief economist, and Celia Chen, director of the housing market department, estimate that the US foreclosures prices will also decline in the first months of 2009.

There has not been such an unsolvable decline since the similar situation that occurred after the Second World War. Although the activity concerning the market estate is bound to become balanced in 2009, it will start to improve only in 2010, when the sales will increase because other activities and prices will blow.

Statistics have proved that foreclosure prices will decrease by 13% until early 2009. If we are to add the other offers businesspersons provide in order to sell their houses, the percentage will drop to 15%, as the report says. In some cities, priced will reach even lower levels: in Punta Gorda, Florida, the decline will be of about 35.5%, whereas in Stockton, Florida it will reach 31.6%. Zande insists that this is the second foreclosures market recession in terms of sternness after The Second World War.

Among the factors, which determined these foreclosures markets, Zande mentioned the departing of investors elsewhere, more and more sub-mortgage loans or the overwhelming constructions of buildings. However, the basic problem, as reported in the article, is the matter of sold properties. Additionally, the present market decline will negatively influence the general economy. Because of the prosperous period between 2004 and 2005, the Gross Domestic Product took benefits of about one percentage from the wealthy economy.

Taking into consideration these situations, the foreclosures market will lose more than one percentage point this year, but the financial consumption in the spring and summer of 2009 can reach 1.5 percentage points. Moody’s company also pointed that more than 4.2% of the loans offered in 2008 were appreciated globally as having a negative impact because of the possibility of funding on the basis of problems raised by credit markets and by the stagnant economic growth.

Furthermore, despite the economical decline estimation approached by various agencies, Moody’s bases on the looming of a period of recession in which the share may reach the 10% stone age. EFE agency underlines the U.S. president’s opinion, Barack Obama, that the United States economy lost so much that the 1000 billion US dollars gained throughout one year will be easily overwhelmed by this deficit. Nevertheless, he claimed that much expenditure should be done in order to revive the economy.

Under these circumstances, bright minds must look for solutions in order to find a way out of this foreclosure crisis. The problem must be approached both at individual and national level. People must be educated to adopt the right attitude as far as loans are concerned and to manage their funds more wisely than before.