Glimmers of hope for the housing market battle daily with predictions of a double dip. So why hasn’t the housing market recovered yet, four years after the bubble burst? U.S. News & World Report listed these six reasons in this week’s issue:
1. Unemployment. Job growth is key to housing recovery and with the national unemployment rate at 9.5 percent, the jobs just aren’t there yet to support a sustainable recovery for housing.
2. Household contraction. When people lose their jobs and their homes, they tend to move in with family or friends, constricting the number of new households — a key driver of real estate demand.
3. Foreclosures. In May, the housing market had a 8.3 month supply of unsold inventory – a balanced market would have a 6-month or lower supply. With foreclosure rates continuing to rise, it could take two or more years to work through all the excess inventory.
4. Tight credit. Even with historically low interest rates on mortgage, if you don’t have good credit (FICO score of 720 or more), you won’t get a mortgage.
5. Falling prices. Although prices have stabilized somewhat, they are predicted to decline in coming months, further scaring off buyers who don’t want to see their investment lose value.
6. Selling current home. If homeowners can’t sell their existing homes, they can’t buy a new one.