Lisa Simpson
Mar 22,2010
In: Real Estate

If the Economy is to Recover the Housing Market Has to Make a Comeback

If the economy is to recover the housing market has to make a comeback.

If the economy is to recover the housing market has to make a comeback – it has become an urgent necessity that cannot be ignored anymore. There are signs of houses up for rentals as well as the usual for sale posters. The rentals indicate good days ahead. It indicates that more people are holding on to their properties and not pushing them into the market to be sold at any damaging price.

Realtors are saying that the biggest problem currently is that of shadow inventory. The owners are withholding the foreclosed units waiting for prices to increase. But the irony is that once these enter the market the prices will tumble again. Short sales and foreclosures will harm the nascent market.

Many house owners have started to rent out rather than try to sell – hoping that meanwhile the housing market will turn. Some homeowners floated a plan – the setting up of a trust dealing with real estate funded by all the participants. The money would be used to purchase the risky properties in the locality prior to their entering the foreclosure zone. This would prevent prices from tumbling and give protection to the investment.

Today nobody trusts anybody and it is understandable that everyone wants guarantees and this puts things at a standstill. One house owner does not know what the other neighbour has in mind. Each wants bidding to commence to see if the price goes up.

But the idea of the American dream is interwoven in the psyche of the people. A house should be primarily a home. It is the most costly purchase of a lifetime. Although greed and recklessness did play its part in creating havoc with the market the real estate continues to be a ground for investment. It is to the interests of individuals and the nation to keep it so.

Here comes in the responsibility of the banks to see that the real estate market is protected. The banks are fortunately realizing this and are becoming much more conservative in chalking out their strategies while dealing with the embattled house owners. The banking sector is slowly realizing that by simply dumping the foreclosed houses in the market hurts all – the individuals, the banks, the investors and the nation. It may not be wishful thinking – real estate is really coming back because it simply has to it is pivotal to the economy.