Housing Market Forecast Grim with more Foreclosures and Unemployment

The outlook for the U.S. Housing market for next year is definitely gloom and could probably be worse than this year. Statistics show that more than 81,000 families lost homes to foreclosures this September, a 71 percent increase from last year proved to be a bad year for the housing market as a record 765,558 foreclosure homes were already tallied with still a month left for the year.

If foreclosure homes were not bad enough, an increase in unemployment is adding fuel to an already raging fire. With the economic crisis and recession in the horizon, unemployment rates are expected to continue climbing. The national rates are already at a high 6.5 percent last October, with 240,000 people losing their jobs, the highest in 14 years.

Economists are projecting these rates to reach 8.5 percent. What is grim here is that the affected industries are not relegated to financial related or homebuilding industries which are direct results of foreclosures, but are steadily including jobs from other industries as well.

With an increase in unemployment, foreclosures will most likely continue in its upswing. More foreclosure homes will flood the market but potential buyers would steadily decline. People with no work definitely could not afford any homes. Potential buyers who have the capital will try to hold on to their money more tightly for fear of suddenly joining the unemployment bandwagon.

The number of repossessed properties in the market has also created a significant decrease in median home prices. These homes are sold at a bargain as banks and financial institutions want them off their books. These properties will be recorded as losses which will affect their stock values. With more inventories, new homes being built are dwindling almost to nothing, triggering more business closures and more layoffs.

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