You want housing to hit bottom already?
Let it run its course. Let all the bad news come out. Let foreclosures flow. Let it crumble…
Propping it up doesn’t work because we end up where we started. Just let it crumble to the lows it’ll hit eventually.
And then call for a bottom.
I don’t care how much your local Realtor wants you to buy a house “at such great prices.”
According to CNNMoney, “the besieged housing market has even further to fall before home prices really hit rock bottom.”
“Several factors will be working against the housing market in the upcoming months, including an increase in foreclosure activity and sustained high unemployment, explained David Stiff, Fiserv’s chief economist.
Should home values meet Fiserv’s expectations, it would make it the third (and lowest) trough for home prices since the housing bubble burst.
The first post-bubble bottom was hit in 2009, when prices fell to 31% below peak. The First-Time Homebuyer Credit helped perk prices up by mid-2010, but by the time the credit expired, prices fell again.
In the second dip, which was reached last winter, prices were down 33%before staging a mild rally that was artificially spurred as banks slowed the processing of foreclosures following the robo-signing scandal, which found that loan servicers were rapidly signing foreclosures without properly vetting them.
Now that the scandal is mostly resolved, lenders are speeding more cases through the foreclosure pipeline and back onto the market, weighing on home prices even further.
Earlier this month, RealtyTrac reported the first quarterly increase in foreclosure filings in three quarters. Even more discouraging: new default notices were up 14%.
There’s also a “shadow inventory” of homes in foreclosure that have yet to go back onto the market.
The specter that those foreclosed homes could flood the market at any time and drive prices significantly lower is a huge concern, said Mark Dotzour, an economist for Texas A&M University. “That’s the elephant in the room,” he said, noting that there are 6 million home currently in shadow inventory.”
Sorry folks, no bottom yet.