It’s no secret that Yolo County and California’s housing markets have been in a prolonged slump. What would it take for housing to reverse course and enter a sustainable rebound? The answer lies within the economic, political and social factors, all of which revolve around the uncertainty that has characterized so much since the national housing crash began in 2006. Here are a few areas in which predictability would make a difference.
Consumer Demand: Quality jobs and a huge dip in the unemployment rate are paramount and top the list of factors that would help housing markets recover. Employment fuels consumer confidence. You’re not going to buy a home if you fear you might not have an income to pay the mortgage. There are no guarantees that home prices will be lower in the future, buyers with stable employment are actively pursuing homes, more demand would systematically increase home prices.
Supply Factor: Bank foreclosures and short sales are a drag on housing markets. Sales of distressed properties have made up a substantial percentage of home sales in recent years. These homes, sold at a discount have put downward pressure on prices. A sell-off of distressed inventory would help move housing toward stability. Areas like Davis, California that had a minimum number of foreclosures and the majority of homes sold were the traditional buyer and seller transfer, have seen home prices stabilizing over the last couple of years.
Home Equity: Numerous homeowners are underwater and can’t sell their home without a short sale approval from the mortgage holder. The solution is to reduce those loan balances, with tough encouragement from the federal government. The need for a bailout in areas hardest hit by the housing downturn is vital and would certainly reduce the onslaught of bank owned and short sale properties. The principal balance reduction is essential to get the market restarted.
Manageable Financing: Stringent financing also constrains demand. Practical underwriting is welcome, but contemptible delays in loan approvals deter both buyers and sellers. Impatience leads buyers to give up and prompts sellers to settle for lower all cash offers. Lenders have to make the loan process less restrictive and expedite loan approval.
Long-Term Policy: There’s too much uncertainty for investors, buyers and sellers with the turmoil at Fannie Mae and Freddie Mac, backlog of foreclosures that are scheduled for release this year and the mortgage interest tax deduction. All of these things should be addressed, but now is not the time. A major change will be needed to spark a housing recovery. These necessary steps would increase the likelihood that California would quickly recover from the housing market crash that has plagued most of California. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative blogs and easy access to view local area homes for sale in Davis, California and the surrounding communities.