The year of 2010 saw very little improvement in the housing sector, and that’s not likely to change in 2011.
The industry’s weaknesses – high unemployment, tight credit, ineffectual government programs, soaring inventories, plunging prices, and so on – are simply too gaping to be resolved by next year.
The real estate research and online brokerage firm Zillow agreed, issuing a report on Nov. 10 noting that U.S. home values fell by 4.3% in the third quarter and chances for improvement over the winter are slim. Chief among the obstacles to a housing market recovery is high unemployment. Unemployment has driven foreclosure statistics to dizzying heights, and in conjunction with tight credit, kept new buyers out of the market.
The government’s Home Affordable Modification Program (HAMP), which was set up in March 2009 to help homeowners in trouble restructure their mortgages and avoid foreclosure, has been an abject failure.
Zillow said in its third-quarter report that 23% of U.S. residential mortgage holders are now “under water” on their loans – the highest level this year – and many will likely be forced into foreclosure in the year ahead.
BY LARRY D. SPEARS