Residential Real Estate is turning the corner

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As a follow up to my post last week, what does residential real estate do next?

Although we still have a lot of challenges ahead of us, the latest information supports last week’s blog. The residential real estate market is starting to recover. The chart below clearly shows we have peaked in the 4 major categories when tracking defaults and late payments on mortgages.

As supply of foreclosures continues to decrease, the inventory level will continue to fall. A strong buying season next spring and summer could spring board us to a manageable inventory levels and move us toward the price appreciation phase of the recovery.

The biggest challenge that still exists is the fact that one in four homeowners with a mortgage owe more than their homes are worth. We have a solution to this with HARP 2 – the updated program from Fannie Mae and Freddie Mac.

If this program is successful, many of these homes will qualify for a refinance. This would reduce monthly mortgage payments by as much as $75-$300 per month. This translates to more disposable income for millions of homeowners that can begin to filter into economy. This will only help spur the economy forward and will aid in its recovery. Stay tuned for the next follow up.

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