Housing Market to Remain Troubled for At Least Three More Years

If this prediction by RealtyTrac, a foreclosure marketplace and tracking service, proves accurate, it could spell the doom of any re-election hopes the Liar-in-Chief may hold. I've been arguing since the summer of 2007 that unless and until the residential housing market stabilizes and begins to rebound, the overall economy will NOT get better for most Americans. Wall Street may be raking in obscene profits and the wealthy seemed about to get a tax windfall at the expense of the rest of the nation, but housing market stability and increasing home equity is what will drive an overall recovery. No one in Washington, D.C., of either party gets this simple fact and no one is holding mortgage lenders accountable for irresponsible foreclosures and foreclosure sale prices that are ridiculously low which in turn pressure neighborhood home prices to fall further. And as prices fall, more homeowners will find themselves upside down on their mortgages with less incentive to continue paying their loans. It's a domino effect that shows no sign of ending. Here are highlights from Rueters:
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The housing market will remain depressed, with record high foreclosure levels, rising mortgage rates and a glut of distressed properties dampening the market for years to come, industry experts predicted on Tuesday.
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"We don't see a full market recovery until 2014," said Rick Sharga of RealtyTrac, a foreclosure marketplace and tracking service. He said that he expected more than 3 million homeowners to receive foreclosure notices in 2010, with more than 1 million homes being seized by banks before the end of the year.
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Both of those numbers are records and expected to go even higher, as $300 billion in adjustable rate loans reset and foreclosures that had been held up by the robo-signing scandal work through the process. That should make the first quarter of 2011 even uglier than the fourth quarter of 2010, he said.
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Mortgage rates will start to rise in 2011, further dampening demand and limiting affordability, said Pete Flint, chief executive of Trulia.com, a real estate search and research website. "Nationally, prices will decline between 5 percent and 7 percent, with most of the decline occurring in the first half of next year," he said.
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Almost half -- 48 percent -- said they'd consider walking away from their homes and their mortgages if they were underwater on their loans. That's up almost 20 percent from when the same question was asked in May. "If that continues it would be an epidemic of strategic defaults," said Flint.
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Roughly 1 in 5 consumers said they expect it to be 2015 before there is a recovery in housing, according to the survey, conducted in November by Harris Interactive. Most respondents said they think recovery will come in 2012 or 2013. Would-be buyers suggested they wouldn't really get serious about purchasing a home for another two years.
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Homebuyers who are willing to take risks and buy distressed properties are likely to see discounts of around 30 percent from prices on comparable homes that are not in distress.