The administration is faced with the problems of plunging housing prices, the nose diving construction industry and helping homeowners avoid foreclosures and eviction. Meanwhile, the existing programs of the administration has invited criticism from advocates of consumers and an oversight panel of the Congress regarding a foreclosure prevention scheme that has not achieved its objectives.
Administration officials defend themselves saying they have initiated and discarded many programs to help the tottering housing market which many economic experts deem as the greatest danger to economic recovery in the coming year. Now, the administration has realized that the best way to help the housing crisis is to solve the growing unemployment problem in America. According to Timothy Geithner, “The most important thing to reduce foreclosures and stop falling housing prices” is “what the government is able to do to get the unemployment rate down much more quickly.”
This judgment is based on the changing nature of the foreclosure crisis: at the start it was led by the demolition of the housing bubble and the bad mortgages that started it. Now the crisis is fueled by unemployed workers who cannot afford to pay their mortgages.
The decision to attack foreclosures in a broad framework also represents the economic and political reality: Any major step will cost a lot to the taxpayer and incite anger in Congress.
Now, new economic data displayed the delicate nature of the housing market and how it affects the larger economy. Sales of new homes continue to dwell at historic depths, though it was a hike of 5.5% from October. Prices of homes are declining even as tax credits targeting home buyers expired, and experts predict that prices will not bottom out into 2012.
Lost equity in housing reduces consumer spending, and the construction sector looks far from regaining its pre-crash employment levels. Even as experts upgrade their forecasts to show optimism over a tax deal truck of Republicans with the Obama administration, they still issued warnings about the housing market crisis.