Although the US banking industry has received the much needed financial succor from the US federal government, the US housing finance services are still in for a really bad time.
The reason is that with the US economy in a recession there are no takers for the more than a trillion homes going a begging without any buyers in the US. The situation is really going from bad to worse when people are ready to sell off their homes for a pittance and they still find no takers.
The subprime crisis in the US resulted in the foreclosure of a great majority of homes right across the US. This scenario when coupled with the fact that most US citizens are presently feeling the pinch of their tightly strapped money belts, what with job layoffs in the offing, everybody is scared stiff of making any untoward investments in the housing sector.
With the lesson well learnt because of the subprime crisis, housing loans are now going to come with a number of mortgage security related tags. The housing finance sector in the US is presently in transformation mode with new rules surely coming into place to prevent a repeat of the subprime crisis again. Introspection into the factors that led to the subprime crisis is currently on the radar of every right-thinking housing finance lender.
It will take quite some time before the heat generated in the financial market because of the subprime crisis cools off. The excess boom in the housing finance services market that peaked off in 2004 will only gradually lose steam and be neutralized only somewhere hopefully in end 2009. Till then the prices of homes across the US are expected to spiral downwards into a bottomless ocean. This scenario is without any precedent in the US or even anywhere else for that matter.
It appears that the economic theories that hitherto sustained capitalism and its market run foundations are in for a widespread overhaul. Till even a distant light can be sighted at the end of a presently endlessly long and dark tunnel, the US housing finance services will continue at best to languish. At worst, the industry will also face bloodshed in the form of widespread layoffs. The subprime crisis is likely to pull off pounds of flesh from every connected sector and the housing finance services are prima donna in the matter.
Every crisis is really good in the sense that it behooves of corrective steps and signs of better times to look forward to in the foreseeable future. Let us hope that housing finance services in the US live to see a much better and stable period beginning in 2010 at least.
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