Home prices: A speck of good news against the backdrop of high unemployment

Posted Jul 22nd 2009 3:10PM by Connie Madon
Filed under: Economic Data, Personal Finance, Housing, Recession

There is a speck of good news in the housing market. According to the Federal Housing Finance Agency, U.S. home prices actually rose 0.9% from April to May, but overall were down 5.6% from a year earlier.

This was the news against the backdrop of a continuing deterioration in the overall market. Let's look at the big picture for a moment:

U.S. delinquency rate rose to a seasonally adjusted 9.12% and the foreclosure rate rose to 1.37% the highest since records were kept in 1972.
One in every eight Americans is now late on their home loan payment or already in foreclosure, according to Jay Brinkmann of the Washington-based bankers' group.
Notices of default, auction or bank seizure rose to a record in the first half of 2009.
Realty Trac Inc. reports that one in every 84 U.S. households received a foreclosure filing in July. That was a 15% increase from a year earlier.

The main culprit of course is high unemployment, now at 9.5%. More that 6.5 million are officially unemployed. Many of these people would have been able to keep their homes had they not been laid off.

President Obama has pledged $275 billion dollars to keep about 9 million people in their homes by offering incentives to lenders to modify terms for delinquent borrowers or refinance mortgages that exceed the value of their homes.

Home price stabilization is therefore directly tied to unemployment. Until we can provide jobs for the unemployed, it is difficult to see much improvement in the housing sector.

Do you see home prices stabilizing in your area?

Tags: home prices, housing market, inthenews, unemployment

Print this

Reader Comments (Page 1 of 1)

7-22-2009 @ 6:51PM

al coholic said...

I don't agree with your statement that high unemployment is the main culprit foir delinquencies.

To me it is more a combination of negative equity and earlier poor mortgage choices by people who were certain that appreciation would always bail them out.