The problem of huge supplies of residential and commercial foreclosures in Tennessee will continue in 2011, according to economists. However, they stated that this is natural since the real estate market will have to get worse first before it can get better. The current year is expected to be a period of correction for the housing market and the state’s economy as a whole.
Foreclosures in Chattanooga and in other areas of Tennessee are projected to continue to maintain their high levels. The main factor that could push the market towards a recovery, analysts asserted, is an improvement in the job market. They stated that for the housing industry and the whole economy to get better, the unemployment level should decline below 8% this year.
Economists also stated that lending standards should be loosened to allow potential buyers to purchase foreclosures in Tennessee and lower the distressed property inventory. They also stated that an improvement in consumer confidence will help the economy recover as well as lower consumer and federal debt levels.
Narrowing their focus on the state’s housing market, economists stated that another factor that threatens whatever minimal improvement and is being seen in real estate is the presence of underwater loans. They claimed that these underwater mortgages will further increase the number of residential and commercial foreclosures in the area if not resolved and can reverse the slight positive development seen in the past few months.
Meanwhile, for the number of foreclosure homes to start declining, housing industry experts stated that a further decrease in housing prices by over 20% might be needed so that homebuyers will start considering purchasing homes again. In the Shelby County area, the average selling price of houses last year was $124,278, up by 1% compared with 2009. Housing analysts revealed that the 32% housing sales accounted for by bank owned properties or foreclosed houses should be lowered for the residential market to attain some form of balance.
Residential and commercial foreclosures will continue to hurt the real estate market this year, analysts have stated. However, an improvement in the job market, no matter how slight, will go a long way towards helping the housing sector recover, analysts further added.