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Foreclosures and the future

11th December 2008 | back to article listings BACK    print this article PRINT

In the US, the end is nigh, or at least it is for the current incumbent of the White House. As George W Bush prepares to spend his final Christmas in office before heading back to Texas, the US will be hoping that the new administration under President-elect Barack Obama will bring with it effective economic policies that will encourage a recovery from the current economic slump.

Property investors will be hoping for this as well, for growth in that market may be a result of a better wider economy as well as a partial cause of it. But while some will look to the future with hope and expectation, others may be seeking to take advantage of the property bargains on offer due to the continued high level of foreclosures.

Market research firm RealtyTrac revealed this week that the number of these has actually fallen recently. Chief executive of the firm James Saccacio noted: "Foreclosure activity in November hit the lowest level we've seen since June thanks in part to recently enacted laws that have extended the foreclosure process in some states, along with more aggressive loan modification programs and self-imposed holiday foreclosure moratoriums introduced by some lenders."

However, he added: "There are several indications, however, that this lower activity is simply a temporary lull before another foreclosure storm hits in the coming months." He observed that figures from the US Mortgage Bankers Association revealed a seven per cent rise in the third quarter in the number of mortgages in "delinquent" status that are not yet subject to foreclosure, suggesting the levels could rise again in 2009.

So for those keen to invest in this kind of property, the availability of it may be falling slightly in the near term, but then rising again.

Of course, there will be those who hope that this very problem can be helped by Mr Obama. The study noted that the states with the most foreclosures were California, Florida and Michigan. Notably, Mr Obama won all of these states. This may suggest to some an electorate looking to punish a Republican administration for perceived economic policy errors, but could also be a vote of hope in the new president.

However, it is worth noting that none of the five stated key components of the economic recovery plan proposed by Mr Obama include housing. Instead they involve massive public sector investment in building new roads, improving schools, modernising healthcare, establishing more broadband internet connections and making public buildings more efficient. This Keynesian measure could have positive economic results (particularly in employment levels) in a broader sense, but it may well be that when it comes to the property sector, the opportunities for investors to pick up foreclosed bargains across the US will be around for some time yet.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4532.html. Alternatively, please see our full press release archive.

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