EWING, N.J. – On the brink of Tuesday’s decision where the Federal Reserve would consider mortgage forgiveness to homeowners, there have been changes in local consumer spending and a rise in home prices.
Weidel Realtors of Ewing, believe that they will see a healing in the industry.
“Buyers are very savvy today,” said Robin Stewart, broker and director of sales. “Banks are more apt to giving mortgages,” she said.
However, Stewart cautioned that in about six months to a year from now, there might be more foreclosures. She said, “We think there will be an influx of foreclosures. We’ve only seen the brunt of it.”
The Federal Reserve is still waiting on more information to see if they should take further action to boost the economy, said Financial Times writers, Shannon Bond in New York, and Robin Harding in Washington. Even though mortgages are only a small portion of the economy, economists still consider home sales during economic slow downs.
Since home sales usually soar during the spring and summer months of March through June, this is just a seasonal outlook.
“We did see a big surge where sales doubled earlier this year as opposed to the same time last year,” said Stewart.
According to Jim O’Sullivan, chief U.S. economist at High Frequency Economics, the research group, “the monthly improvement may be due to homes in foreclosure and short sales accounting for a smaller proportion of total home sales.”
Stewart agreed. She explained that some banks required that homeowners pay back their short sales. She said that some banks, however, were claiming these as losses and offering 1099 forms to homeowners who will then pay taxes on these short sales.
Their article concludes that retail sales fell in June for a third month. According to the writers, this suggests that the “sentiment has been darkening.”
O’Sullivan advises that, “‘the confidence data continue to show weakness…”’
Stewart said, “People are not really trying to spend their money on retail because they don’t know what’s going to happen in this economy.”
Therefore, the economy is showing signs of weakness, but with the rise in housing prices there is the notion of confidence and recovery. Since the housing market numbers seem to be seasonal, economists are not convinced as yet.