The same clueless economists “shocked” by the housing crash now appear “shocked” that the second leg of the downturn has arrived. But ever since we called the subprime fiasco of 2007, none of the downside in housing has been a surprise… none of it.
And we only expect for things to get worse.
In fact, according to Zillow, a real estate company, home prices are falling at their fastest rate since the Lehman-collapse news. They also believe prices will fall another 8% this year and admit that housing won’t bottom until 2012 — just as we’ve called for in the past.
“There’s no way we can get to flat, from these depreciation levels, in the last nine months of the year,” says Zillow economist Stan Humphries. “Demand is a lot more anemic than we had previously thought.”
Thinking we’ve bottomed is like thinking the economy is on the up and up… and all is well.
Any one that tells you housing has bottomed… or will bottom over the next few months, shouldn’t be giving investment advice. Period. People are still losing their jobs. Resets haven’t finished.
More than 25% of homeowners owe more than their homes are worth… which could result in more strategic defaults, driving up foreclosure rates even more.
There is a tremendous amount of inventory on the market. More will be coming because so many people are not paying their mortgages. Some aren’t paying because they can’t afford to. And with banks reeling from all the bad paper they’re holding, they’re not real motivated to lend money to people that could burn them in the future.
Home prices could easily slide for years… thanks in part to shadow inventories, too, which are just sickening. Government mortgage modification programs have been a failure, failing to account for negative equity in homes. If they bothered to pay attention to negative equity, they could actually get some handle on future mortgage defaults and foreclosures.
Ignore the housing bulls… They’re getting ahead of themselves again.