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EDITOR’S NOTE: Realtors and Banks are putting out all kinds of articles telling us that things are improving — only to retract them later, which gets less attention. The fact is that the housing recovery will not occur until foreclosures a resolved. Prices will continue to decline indefinitely until (a) the supply of homes for sale is reduced including the shadow inventory of homes for sale that are not yet on the market and (b) until the corruption of title on all such homes that were subject to claims of securitization is resolved.
At our current pace, most experts agree that we are barely half way through this mess and like the forecasts for the housing recovery that will also be extended. So at a minimum, housing will mostly decline for another 5 years which puts us sometimes into 2017. THEN, if it indeed bottoms out, we will start one of two things (a) stagnation or (b) rising prices. Most experts agree that stagnation is likely for a long period of time followed by very modest price increases. Based upon the available data, the housing market, without massive correction to the truth of what happened, will be virtually dead and no return to 2001 levels, even with inflation until sometime after the year 2030.
Right now, anyone who buys a house is facing the likelihood of a loss unless then live in it for at least 20 years.
By Martha C. White

This year was supposed to be the bottom for the housing market and 2012 was supposed to mark the turnaround. In reality, even the improvements sound like bad news, and some forecasters are saying we’ll have another year of gloom before the clouds break.

“It’s unlikely prices will rise next year in most markets,” said Jed Kolko, chief economist at real estate information site Trulia. “By that measure most local markets will not recover next year, but prices are only one measure of how the housing market is doing.”

American home values are likely to shed $681 billion this year, according to Zillow. That’s better than the $1.1 trillion lost in 2010, but hardly worth breaking out the bubbly.

In a nutshell, that’s the problem with the housing market today. Even the good news is relative, and a true recovery is still at least a few quarters away.

“[T]he unabsorbed pool of housing supply, dragging levels of consumer confidence, high unemployment and negative equity will continue to put downward pressure on the housing market, pushing our expectation for a potential recovery into late 2012 or early 2013,” Stan Humphries, chief economist at real estate research company Zillow Inc., said in a statement.

Data company CoreLogic estimates there is a “shadow inventory” of 1.6 million homes, which is the biggest drag on prices.

“Foreclosures lead to very motivated sellers, which will have a destabilizing effect on prices,” said Nicolas Retsinas, professor of real estate at Harvard Business School. The sluggish pace of foreclosures — hampered by the robo-signing scandal, ongoing investigations and litigation — have stalled the movement of those homes back into the market.

Data on the number of sales is more promising.

In November, sales of single-family homes hit a seven-month high. Sales rose 1.6 percent for the month, and 9.8 percent over the past 12 months.

But these figures are climbing back from abysmal depths; the National Association of Realtors thjs week lowered its figures on the number of homes sold between 2007 and 2010 by nearly 3 million, down to 17.7 million.

“With a highly leveraged housing bust, you haven’t seen that increase in residential investment in spite of low interest rates,” said Ted Gayer, a senior fellow at Brookings Institution.

Slack demand for existing homes also means fewer buyers for new homes. Home building has traditionally been the tow truck that pulls the economy out of the mud, but with so many empty houses and so few people moving into them, that’s not the case this time around.

“It’s not a demand problem,” Gayer said. “When you have such a huge excess supply it doesn’t really get at the problem.”

Even though interest rates are at record lows, a tight credit market is keeping people who do want to buy on the sidelines, said Retsinas. Lower rates of household formation — fewer immigrants and more adult children still living with their parents — also quash demand.


16 Responses

  1. EULE:
    Zillow is still part of the problem by listing repo sales back to Fannie mae and HUD as legit sales. In other words the house in foreclosure finally gets bought back by HUD for full price and eventually might get back on the market at a reduced price.
    But a HUD or Fannie Mae buy back is not a sale to a new homeowner. It takes it temporarily off the market, is listed as a sale even though it still remains empty. It takes a few months to cycle it back on the market. It’s like shuffling cards, the deck is still the same, the same cards are there just in a different order.
    I agree Occupy your home, hopefully Occupy will take up the cause and focus on foreclosures because nobody else seems to really care or willing to put forth a plan that works for the owners.

  2. @E. Toile,

    I pondered for a while whether to mention that article and if it would cause any harm. I ended up thinking that one of two things will take place: those of us who have already started taking action will intensify their efforts to make sure everything that needs to be done in the first half of 2012 is done and those who’ve been sitting on their thumbs, shoving down oreo cookies will keep sitting on their thumbs, shoving down oreo cookies.

    Except that now, they’ll have one more excuse for doing nothing:.. So, no harm caused.

    Plus, no two economists seem to have the same opinion. It ranges from delirious with optimism to Armageddon is at the door… I think nobody knows WTF to think. Let alone “forecast”.

  3. So Enraged, are you saying that this fierce pounding in the shorts I’ve been receiving from the banks due to the government dropping my drawers for them is simply a prelude to the real fun coming up in the 2nd half of 2012?

    Thanks. That gives me something to look forward to.

  4. I was just reading an article written by an economist. Apparently, we don’t have until 2013. The window of opportunity to fix it before it blows is shrinking at a fast speed and if something drastic isn’t done at the world level in the first part of 2012, there won’t be a second half…


  5. @iwantmynpv,

    That’s correct…and that is why we need to take BACK our county recorders offices…lawfully…

  6. @marsha

    Contact Mandelman at mandelmatters asap. He is from CA and he knows everyone there is to know. If you can’t get through, call OWS wherever you are. Again, they know every attorney who gets it and works on a contingency basis.

  7. Dear Neil, I am in a wrongful predatory foreclosure in Ca. against Wachovia and I have proof of fraud but I feel i need a attorney to enforce damages, and attorney’s fees. Neil, would you recommend an attorney that would take my case on contingency? thank you, mk

  8. I can remember the day; Ed Romaine, than Suffolk County Clerk stated:

    If we allow the banks to create an internal recording system they will destroy the land title records of this country within 20 years.

    They did it in nine. You were wrong Mr. Romaine.

  9. Just remember that Zillow and Corelogic AVM numbers was faulty ,
    and it will be proved 1000% .
    It will take time , until the courts tell them , the should not give faulty numbers to the banks , and the Banks should not safe money on the AVM appraisal Idea . That is the day , when the picture change.

  10. Works for me! What’s done is done until we have the political will to fix it.. The lack of will just means I’ll have some time to save up and do my own personal “cash for keys” with someone desperate to get out of a million dollar property…





  12. Just wait until the title companies awaken en masse and refuse to insure properties bought at foreclosure sales….all foreclosures will lose their market value and that will force the entire real estate market, AGAIN, into a downward spiral, along with the economy, as it did in 2007-2008.

  13. At this pace no recovery till 2023.

  14. haha that msnbc link is ???
    merry xmas LL and all the posters here.. we will prevail!
    occupy your home!

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