Foreclosure Crisis and the Possibility of a Recession

Over the last two years, the number of foreclosure filings recorded nationwide have reached more than two million. During the first year, many analysts were really not that worried and believed that the market will soon correct itself.

But alas! The foreclosure crisis seems to be more serious than what real estate experts initially suspected. As more and more distressed homeowners find themselves losing to foreclosure, home prices have declined steadily for as much as 30 percent. Previously attractive neighborhoods are now marred with these abandoned homes, some of which are too dilapidated to hold any buyer interest.

These foreclosed properties are now becoming the center of attention. Non-profit organizations together with local officials are organizing programs that will try to help these distressed borrowers stay in their homes. The federal government is also working overtime. Lending guidelines have already been tightened to protect consumers.

Unfortunately, all these efforts are not making any dent on the rampaging mortgage crisis. Last month, the national foreclosure rate rose by almost 50 percent compared to last year. It seems that as days pass, the possibility that the nation will enter a recession is no longer unlikely.

To make matters worse, fuel prices worldwide have soared to record levels. In the United States, experts believe that it will hit the $5/gallon mark. Consumer debt has also increased as a result of the growing number of homeowners struggling to make ends meet.

The only good news is that some of the states hit hardest by the foreclosure mess such as California have seen some marked increase in sales activity. Buyers and investors who have stood in the sideline for such a long time are finally taking advantage of the hidden opportunities that the current market is offering. Experts are actually beginning to believe that somehow, the nation’s housing sector has reached rock bottom and there is certainly no other way to go but up.