The following is a 60 Minutes video that is interesting. When watching the video, the initial feeling might be somewhat depressing. However, keep in mind a number of factors:
1. The video pertains to the housing market on a national level. It discusses inventory on the rise. In our pocket of West Savage, inventory has dropped steeply. As of November 2, 2009, inventory in West Savage is down 50%.
2. The video predicts another wave of foreclosures coming in 2010 and 2011. This is something we have long been discussing in communications with West Savage homeowners. We expect that many of the ARMS will be resetting in these upcoming couple of years. Knowing that, many lenders are offering loan modifications to troubled borrowers. While the long-term success of these programs is yet to be discovered, we know that from an initial standpoint, it has staved off a few of the foreclosures that would have otherwise hit our local market. It can be expected that some of those who underwent loan mods will eventually default on those as well. The rate of this is still to be determined.
3. The video discusses that home prices will continue to fall. On a national scale that is most certainly true. And we really cannot predict what will happen to us locally. We can state that, at least in this part of West Savage, the steep drops in inventory have helped slow the pricing fall. What winter will bring is anybody's guess. But right now, here in West Savage, we are seeing a stabilizing of pricing, as we head into winter. We hope that trend will continue through Minnesota's coldest months.
So then, why are we posting this video? We think it contains some interesting points of value on a national scale. Homeowners with any plans for selling in the future should be aware that these ARMS are going to resetting in large waves. How they are dealt with (i.e. refinancing, loan modifications, foreclosure, etc.) is anybody's guess at this point. And how many will affect our local market, no one knows.
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