In the Eye of the Foreclosure Storm

The recent foreclosure statistics are making their rounds in the media, and giving a lot of people what could be seen as a false hope for the short-term future of the housing market.  Many of the headlines report that foreclosures have decreased over the last few months.  Though, technically, this is true - it is not in any way a sign that the housing market is about to slingshot back.

The issues regarding robo-signing, faulty paperwork, and other challenges have the banks trying to correct many of the problems that were brought to the surface in recent months.

For the past three (3) months, fewer than 300,000 properties are receiving foreclosure filings after 20 straight months where the total each month exceeded that same number.  And, though less foreclosures are actually hitting the active market, the percentage of loans in foreclosure rose to equal the all-time high.

Picture it like this:  Due to the overheated market between 2001-2005, foreclosures in the past few years have flooded the market.  At this point, most states (especially Judicial Foreclosure states like Illinois) have built a temporary dam to keep the market from remaining under a flood plane.  The keyword in the previous sentence is "temporary."  Those loans that are on the sidelines in foreclosure right now or facing it in the near future are about to hit the market again - and with vengeance.  The "dam" was never meant to be permanent.

Though it sounds alarming, it really isn't so bad.  The shadow of the overheated market will continue to linger in Real Estate for a while, but shouldn't stop you, as a consumer, from continuing on the path of the American Dream.  MSNMoney.com reported that, from January 2000 to June 2010, Real Estate still gave a 43% return on investment, which is more than DOW, S&P, and Nasdaq combined.

At the end of the day, check your options.  Homeownership may not be as scary as you might think.