The U.S. Southwest, currently a hotbed of investor activity, once epitomized the falling-out of the housing sector. According to experts, this particular region was responsible for the loss of approximately $7 trillion in homeowner equity while eviscerating the finances of millions of Americans. However, the hard-hit Sun Belt will now serve as the stage in which President Barack Obama facilitates the continued resurgence of the housing sector recovery.
The President of our great nation intends to address the recent success of the housing sector today from Phoenix, Arizona. As part of a summer tour that is expected to highlight critical aspects of the economy, Obama is expected to update the American people on current market conditions and provide encouragement for the recent progression.
Those familiar with Obama’s 2009 trip to Arizona may recall that his speech was saturated with hope and determination, as it introduced a plan to revive the U.S. housing sector from its economic lull. However, today’s trip to Phoenix will serve as a reminder to our current situation. While our country has taken significant steps towards recovery, a permanent solution to this predicament remains to be seen. The constant evolution of this particular industry provides unique challenges every year and it is important to remain relentless as we continue to move forward. Avoiding complacency is imperative to the trend of our housing sector recovery.
“My fear is that people think the problem is over,” said Patricia Garcia Duarte, president of Neighborhood Housing Services of Phoenix. “There are still families that are struggling.”
Duarte has already acknowledged that citizens with steady work and decent credit are finding it difficult to acquire a loan, as lenders have tightened their practices. Furthermore, the downward trend in foreclosures is directly correlated to a rise in short sales. While many families are able to navigate the treacherous waters of the foreclosure process, they are often forced to sell their house for less than they owe on the mortgage. The recent influx of investors has also served to reduce the rate of ownership, as many have taken advantage of current conditions and turned their properties into rentals.
While investors are reaping the benefits, declining homeownership rates are stagnating recovery efforts. “I would like the president to highlight that homeownership should be a good investment,” she said. “I think policymakers shifted and crossed out homeownership as a good thing to do for this country.”
There is not doubt that investor activity promoted the rebound we are experiencing. The housing sector in the Southwest, and nationally, has taken hold and is on the right track as a result of their participation. However, individual involvement needs to increase for the United States to sustain the market.
“Investors were instrumental in turning housing markets around, but we need to see the baton passed from the investor to the first-time home buyer,” said Mark Zandi, chief economist for Moody’s Analytics.
In his speech, however, Obama is expected to announce a plan to make homeownership more affordable. Doing so will allow delinquent homeowners to stay in their homes and first-time buyers to participate in the recovery. According to Aamer Madhani, a writer for USA Today, “Obama is expected to repeat his call for Congress to take action to make it easier for homeowners who are underwater on their mortgages to refinance their loans at lower interest rates and move to make it easier for home buyers to get loans and will amplify his call for greater simplification of lending terms.”