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March 22, 2010
Many economists have identified a recovery in the housing markets to be necessary before there is a significant recovery in the economy. Housing is the primary source of net worth for most households and a big part of every local economy. It is also vital to the health of banking institutions that depend on the mortgage markets for income. The elimination of distressed assets is required to shore up bank's balance sheets so they are able to lend to employers and entrepreneurs.
Do we have reason to believe that there is recovery on the horizon? There are a few encouraging developments. There are signs that banks are discovering that they need to moderate the pace at which they introduce bank owned properties in to the market place. They are figuring out that flooding the market only lowers the value of their collateral on non-distressed properties.
The new home loan modification program should help keep more homes from entering in to foreclosure.
Builder confidence is at recent and all time lows. This will keep builders for building homes that built on speculation. This will help keep inventory down. Many market experts believe this circumstance will cause a shortage in new housing over the next couple years.
Interest rates may not go up as much as many had feared. Bellevue mortgage rates have stayed close to where they have been over the last few months in spite of the expiration of the government's program to lower interest rates. Low interest rates have not automatically translated in to robust real estate activity but it will help support higher activity.
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