Good News... Or Not

As foreclosure news stories come out every day about newly-discovered foreclosure scams, falling home values, and a stagnant real estate market, it is rare that an article reflecting good news is released. This fact increases the emotional impact of a recent story from MarketWatch, although, considering the hardships of many foreclosure victims, its impact may not be felt in the near term.

The news itself, though, does make a difference to foreclosure victims nationwide, as MarketWatch reports that "Sales of existing U.S. homes rose 0.5% to a seasonally adjusted annual rate of 6.24 million in October, the first increase since February." Essentially, this means that homeowners stand a better chance of selling their homes to stop foreclosure, if that is the only option they are left with.

In addition, with more homes being sold, that translates into higher home values, eventually. With seven months of slowing sales and decreasing home prices, a small relief is quite welcome. For foreclosure victims, the possibility of a refinance goes up dramatically as home values increase. With strict loan to value (LTV) requirements on most foreclosure loans, increasing values can give homeowners the last little chance to qualify for a straight refinance to stop foreclosure.

In the short term, though, house prices are continuing to fall; i.e., stabilize. The amount of homes available in inventory is also continuing to rise, indicating that supply and demand for homes have not yet reached equilibrium. Of course, this is not good news for foreclosure victims, but the increase in sales does provide a measure of reflief for homeowners.

In fact, the good news may be only a small sliver of hope for the economy, which is still in danger of a continuing near-term downturn in the housing market. However, any news that may positively affect homeowners in hardship situations is more than welcome.