The Obama administration is floating trial balloons this week, suggesting stronger government action may be needed to stem the rising rate of foreclosures.
Housing experts agree that real estate values won't stop falling until the rate of foreclosures stops rising. So far, statistics suggest that hasn't happened yet, and with concerns that unemployment will soon hit double digits, the administration is considering more help for struggling homeowners.
The Reuters news agency quotes administration sources as saying the White House is considering ways to delay foreclosure for jobless homeowners who are unable to keep up with monthly payments. Among the items said to be under consideration are allowing borrowers to delay, defer or skip payments.
According to the official, the administration is even considering a plan to allow defaulting homeowners to rent their homes for several years, rather than be forced to move. It's not clear what kind of legislative action would be required for that, or whether it would pass constitutional hurdles.
The possible reason these extreme measures are now being considered is the foreclosure tsunami, after building for two years, still hasn't crested.
In fact, the Web site Foreclosuredeals.com predicts that foreclosed properties will continue to dominate the real estate market in many regions of the country, depressing values of both residential and commercial property.
For example, in Utah's Washington County, the region's foreclosure rate remains higher than the national average. According to a recent report by First American CoreLogic, the region witnessed 3,747 foreclosure filings from June 2008 to May 2009, with an average of 10.27 foreclosures each day.
South Florida is another region that has been hard hit. In the last six months, lenders have filed more than 52,000 foreclosures and it's expected that by the time the year is over there will be more than 100,000 foreclosures filed in the tri-county area, according to a new report from Condo Vulture, LLC.
This same report noted that foreclosure filings are growing at a pace of nearly 2,200 per week, while the number of resale properties on the market in South Florida is falling at around 900 per week.
"While the rising foreclosure rate is bad news for sellers, it's good news for homebuyers," James Foxx, Business Analyst at ForeclosureDeals.com said. "The rising foreclosure rate in this country has no doubt given rise to millions of foreclosure homes that are now available for sale at rock-bottom prices. Real estate investors as well as first-time home buyers can now buy properties priced at well below market value."
Commercial foreclosures are also on the rise. The Dallas Business Journal reports that commercial foreclosures jumped 12 percent in the first seven months of 2009 compared to 2008. In New Jersey, foreclosed commercial properties also continued to soar. When the second quarter of 2009 was compared to 2008, the numbers had tripled.
Nationwide, retail space is the biggest commercial property sector of concern, with more than $31 billion in property considered distressed, according to Real Capital Analytics, a New York-based commercial real estate analysis company.
