Experts Caution Real Estate Recovery May Not Have Strength to Last
Home prices are rising, foreclosures are falling and consumers are snatching up properties: It looks like the housing market is on the mend. But all is not as it seems, say bankruptcy attorneys.
Recently, real estate experts have been speculating that the real estate recovery won't last.
According to CNN Money, there are three main reasons the market comeback could be in jeopardy.
Homes are selling, but it's not homeowners who are doing the buying.
The majority of properties are being purchased by investors taking advantage of low mortgage rates and home prices. As a result of this surge in demand, home values and interest rates are being driven up.
Meanwhile, low- and middle-income consumers looking to buy a primary residence will be unable to afford a mortgage. Sound familiar? It's similar to what caused the original housing bubble.
As prices rise, investors will likely pull back, reducing - and maybe even reversing - any gains.
It used to be that housing threatened the economy; these days, the economy seems to be threatening housing.
After making gains, the job market is slowing down. Recently it was announced that half a million workers withdrew from the job market, either because they gave up on finding work or opted to retire and thus stopped collecting unemployment.
Student debt is on the rise and, while the number of families with credit card debt has decreased, those with debt have more than ever.
With smaller paychecks and more expenses, it's becoming increasingly difficult for first-time homebuyers to finance a purchase. Those with homes are unlikely to upgrade because, often times, they're struggling to keep up with their current mortgage payments.
The good news is that, while bankruptcy can't help the economy, it can help consumers.
Filing for bankruptcy can eliminate debts and help potential homeowners improve credit and the possibility of qualifying for a loan. And if you're struggling to hold onto a home you already own, Chapter 13 bankruptcy can stop foreclosure.
As if the situation isn't bad enough, the $85 billion in spending cuts from the sequestration will peak this summer.
On top of additional job losses, these cuts include the expiration of payroll tax cuts and unpaid days off for more than one million government employees.
It may be enough to bust the already-tight budgets of the many U.S. homeowners struggling to make mortgage payments - leading to more foreclosures, falling prices and the same cycle all over again.
Just when we think things are getting better, the economy throws a curve ball. The reality is that the market will always be up and down. It's up to us as individuals to improve our personal financial situations.
Taking action by filing for bankruptcy has the ability to relieve debt and make payments more manageable, resulting in improved credit, reduced risk of foreclosure and better loan terms. So no matter what happens to housing, your family is protected.
More Blog Entries:
Foreclosures Dwindle to Pre-Housing Crisis Levels: April 12, 2013
3 Reasons the Housing Recovery May Not Last, by Les Christie, CNN Money