From Reuters:
Foreclosures rose in three of every four large U.S. metro areas in this year’s first half, likely ruling out sustained home price gains until 2013, real estate data company RealtyTrac said on Thursday.
Unemployment was the main culprit driving foreclosure actions on more than 1.6 million properties, the company said…
It is a strange thing – I know people who have essentially not done anything (no payments, no discussions with lender, etc) for nearly two years, and no action has been taken against them. I also know people who got foreclosed on very fast. The thing I see in the home lending business, from my point of view, is a complete lack of understanding coupled with rank incompetence – at the banks, it does appear that the right hand doesn’t know what the left hand is doing.
Be that as it may, the problem is so large that even with banks using “extend and pretend” as much as possible with home loans, the number of foreclosures continues to sky rocket. I bet that if everyone who was 90 days or more late got a foreclosure notice, it would amount to millions of people.
There is no cure for this in the sense of any expectation of swiftly stabilizing prices, followed by a steady increase. Until we really allow things to fall flat – or work out alternative methods of essentially sending our housing market through bankruptcy reorganization (“cram down” or my more recent idea of working out a leasing program for foreclosed homes) – we won’t reach the bottom on housing prices. But here’s the really bad news: once we reach bottom, we won’t climb out any time soon – perhaps not for a decade or more.
The reason for that is pure demographics – even if the economy improves, it’ll be several years before wealth and credit are rebuilt to the point where the pool of eligible buyers is sufficient to clear out existing inventory. And even at that point, there will still be a negative drag on home price increases as the Boomers retire and start to die off. Such people will not be looking for big, new homes – if anything, they’ll be looking to downsize…and as they die of old age, the upcoming generation will prove too small to make up the difference in demand.
All is not gloom and doom – this situation will keep homes cheap for people just starting out in life, provided they can get jobs – but it is a harsh situation and we should meet it squarely. No more illusions about a rapid recovery; no more idiot theories that home prices will rebound towards 2006 levels; no more price supports for a dead housing market.
Blogs For Victory 