Can it possibly be August? It certainly is, and folks, we are still in the midst of a housing crisis. Yes, I used the word, "crisis". There are definitely markets showing signs of recovery, as we have discussed in a previous post (http://www.blogging.lease2buy.com/2010/06/foreclosure-preventionimproved-housing.html), however, the rest of the market is struggling.
An article recently cited the "6 Reasons the Housing Market Hasn't Recovered" (with credit to Luke Mullins of U.S. News and World Report), and the reasons were:
1) Labor market
2) Household formation
4) Tight credit
5) Falling home prices
6) Selling your other home
Two of these I found very interesting, and the first being "Household Formation". This is an angle that I personally have never thought about before, and might I add that it is a very good observation. What the author is saying is that basically, people cannot afford to branch out and purchase a home. People have fallen on hard times, and some have moved in with friends and family. Some couples who are looking to get married and purchase a home are perhaps holding off and staying in their rented apartment until things recover. Overall, a very good observation.
The other point was that of, "Selling your other home". This has always been a problem, but is amplified during a market with falling housing prices, coupled with falling credit scores and income (or lack thereof). When you need to sell your home before you are able to purchase a new home, this takes it's toll. People are always looking to up size, downsize, or need to sell since they are moving. As we are seeing creative real estate options becoming more mainstream, such as Rent to Own (See our recent Blog post on this: http://www.blogging.lease2buy.com/2010/06/rent-to-own-transactions-move-into.html ), this will hopefully mitigate this factor from inhibiting our recovery.
In keeping with our discussion, next week, there will be some important numbers released, which are the Construction Spending figures on Monday, and the Pending Home Sales Index numbers on Tuesday. Let's keep any eye on these together.
Do you have any gripes about this market? What are your thoughts?
Have a Great Weekend, and Happy Rent-to-Owning !