Economic Recoveries can be Confusing 19

foreclosures and loan modsWhen talking about the recovery of the housing market, we’ve got to really decide just what our expectations are. I mean that we need to think long and hard about what we’re hoping is the “best case scenario” and then we’ll at least know it when we see it. And unfortunately I think a lot of the players in this industry just don’t have things clear.

For one thing, we obviously don’t want to go back to the pre-recession days. That would mean the bubble is ripe for bursting and we’d be right back in the same terrible situation. (Unless you’re a speculator who missed the boat the first time, but we’ll talk about you some other time.) And we can’t be looking for permanently low home values because then the market would be frozen in neutral and that wouldn’t benefit anyone.

To make matters worse some “confusing” data has just come out. Take April for instance. We heard reports of 70,000 permanent loan modifications going through. Then that number is contrasted with 59,000 forclosure sales. This strikes some people are troubling. The argument goes “if the loan mod program was working right there wouldn’t be so many foreclosures.”

I say that’s a load of … hogwash. Foreclosures have been hard for people but they’re honestly one of the best ways the market has for correcting itself. People who got loans they should never have taken and got in over their heads need to relocate. I don’t think loan mods were ever really meant for them. They should be focusing on those who suffered employment-wise from the recession and help them find a way to make their payments.

So I don’t see those two numbers as a contradiction. It’s all about what you’re looking for. And I think the recovery is right on track and we’re seeing all the right moves. The question is, are you ready to make money out of all of this?

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