If you think home prices have hit bottom and are now headed back up for good, think again! Round two is about to begin. Words: 552
Lorimer Wilson, editor of www.munKNEE.com, provides below further reformatted and edited excerpts from the TheTrumphet.com original article* for the sake of clarity and brevity to ensure a fast and easy read:
13.5% of All Home “Owners” Are Behind in Their Mortgage Payments
Lender Processing Services reports that mortgage delinquencies have reached record highs – a whopping 10.2 % and the percentage is still growing. Add in homes that are in some stage of foreclosure and the rate for non-current mortgages rises to an astounding 13.5 percent or a total of approximately 8 million homeowners behind on their payments.
Foreclosure Rate Up 51.1% vs. Year Ago
That is not all. In February the total number of foreclosures jumped by 51.1 percent over February 2009 levels—which seems to indicate that banks are finally starting to face the music and starting to repossess homes.
Mike Whitney maintains** that “banks have been withholding supply to keep prices artificially high.” During the banking panic in 2008 and 2009, banks did not want to foreclose on homes because it would have pushed prices lower, and that would have affected the value of banks’ mortgage-backed security bonds—causing the banks more trouble at a time when many big banks were collapsing. The government too wanted to stop foreclosures, for political reasons, so a moratorium on foreclosures was adopted.
That moratorium ended on March 31, and now that the banks are stuffed with reserves (due to the bank bailout program), “there’s no need to continue the charade,” says Whitney. “So the dumping of backlog homes has begun” and the house dumping could turn into a flood.
Bank of America to Increase Foreclosures by 600%!
On March 29, the Irvine Housing Blog reported that Bank of America was set to increase its monthly foreclosures from 7,500 per month to 45,000 per month—a 600 percent increase. At this rate, Bank of America will foreclose on 540,000 homes over the next year. Other banks are set to follow suit.
“It’s a disaster,” says Whitney. It will affect everything from consumer spending to state revenues not to mention a national unemployment rate still above 17.5 percent and 20 million vacant homes currently saturating the housing market.
The American Reality
In the run-up to peak housing in 2007, upward of 40 percent of all job creation, by some estimates, within the U.S. economy was related to the housing market (builders, suppliers, real-estate agents, brokers, bankers, etc.). Those jobs are now gone, and unless housing prices not only stop falling but start rising, the jobs won’t be coming back again but here is the catch.
Before the housing market can sustainably regain its health, and before consumers can start responsibly spending again, housing prices have to be at a point where regular people can afford them. That means housing prices still need to fall.
– The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
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