Since the year 2006, the housing boom in San Diego and across the country has highly receded, dropping down by almost 21 percent. While the property owners are eagerly waiting to hear some good news, the recent talks of the global recession and the likes of it have banished all possibilities of the same. The property markets are going to take a lot of time before recovering and some of the reasons that are going to hamper the quick recovery of the housing markets in the year 2009 are mentioned as follows.
Recession:
While the rumors were in the air, the National Bureau of Economic Research made an official announcement reciting that the US economy has been undergoing sever recession since the late 2007. The GDP of the nation is expected to fall further by 3 or more counts and that brings the economy further in question. With the recession sounding the bells, the housing market is going to face fewer buyers.
Unemployment:
With the recession making its way into this year, the number of job cuts and downsizing within small and big corporate companies is making a huge impact on the rate of unemployment. According to an estimate, the present rate of unemployment in US is 6.5%, while it is expected to rise to 9% by the end of this year. Already, thousands of jobs have been laid and more are on their way. With such a scenario, people without jobs and no money, the housing market is going to have even fewer takers.
Buyer confidence:
With the consumers worried sick about the receding global economy, extremely few are going to venture out in buying property or houses. With the economic position tightening, almost no one will be inclined towards spending or investing their money into a market which is itself not stable enough.
Devaluation prospect:
It is estimated that almost every one individual out of seven in United States is facing a negative equity on their property. Several home owners who had recently brought their property are walking away from the loans, claiming bankruptcy, instead of paying for the loans and interest that amount to more than the remaining total equity (as valuated today) of the property. This might lead to a further fall in the property prices, and with this uncertainty, no buyer would be committed towards buying a property.
Tougher norms for loans:
With the blind lending to the unqualified people, the complete financial situation in US went below the water and led to the ongoing recession. This has led to the financial institutions forming extremely stringent credit requirements, even for the people who make for a well qualified buyer. While obtaining a credit or mortgage becomes tough in this year, the demand for housing products and properties will also decline further more.
Slower or no development:
With the lack of credit and loans, the developers too are staying put in their places not venturing out for developing more properties. Therefore, even as there are no buyers, the developers are also taking it slow. The demand for households is falling as the young ones return to their parentsí nests and singles shift with one other to form for a cheaper accommodation.
Subprime mortgages and Foreclosures: Subprime mortgages are going to be a continuing problem this year, aggravating even more than the one faced in the last year. Then again, for the sellers, the sale of foreclosed property spells doom as the buyers make the most of the opportunity in getting the best bargained deal.
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