The real estate market has been undeniably painful for the past five years, but many Realtors are saying that out recent recession has created one of the most bizarre real estate markets in industry history. In fact, Realtors and real estate industry associations have been lobbying in Washington D.C. to protect the home mortgage interest tax deduction that is being threatened and is working to build a sustainable second mortgage market, two of the major components that encourage home ownership.

Real estate is a cyclical market; however, the housing market can usually bring an economy out of a recession and has yet to do so in the past five years. Families typically view their financial security similar to their home value. American family that owns a home has an average net worth of $188,000, whereas a family who rents has an average net worth of $4,600. While homeownership is still a great way to build a family’s net worth, Realtors are struggling now more than ever to keep the dream of home ownership alive. Encouraging home ownership is in everyone’s best interest, so it should be considered a national agenda to get families qualified for affordable interest rates.

Interest rates have been at record lows, but banks have been extremely strict with their lending qualifications, leaving homeowner hopefuls feeling frustrated and out of options. Even if they have money to put down, if their credit score has been negatively affected, they could be out of options. This wasn’t always the case, and banks used to be more willing to work with “high risk” investments by requiring paying a higher interest rate, a larger down payment, additional points, or a combination of the three. Now, tight credit can be an instant deal killer, and it cost the housing industry 770,000 transactions in 2011. Those lost transactions mean a loss of 375,000 jobs, since each transaction sustains half a job and affects almost 80 more.

So is there any possibly solution? Do Realtors see the market staying “bizarrely” unstable for years to come? Some suggest that a sustainable replacement is becoming necessary for mortgage giants Fannie Mae and Freddie Mac. For 80 years they provided stability in the housing market, but they are no longer able to offer buyers predictable interest rates. So far it also appears that Congress won’t drop the mortgage interest deduction, which would add more financial strain to homeowners who benefit from that tax break.

For more information on the housing market and to check out our homes for sale in Denver CO, visit us at PorchLight Realty.

About PorchLight Real Estate: PorchLight Real Estate Group has the most experienced and knowledgeable Denver real estate agents in Colorado. For more information about homes for sale in Denver CO or specific neighborhood homes please visit www.porchlightgroup.com.

Advertisements