Foreclosure Tsunami
This morning, Federal Reserve chief Ben Bernanke spoke about the U.S. economic outlook in remarks prepared for a bankers’ conference in South Africa. Regarding housing, he noted that the downturn in this sector continues, and that its drag on the rest of the economy may last “for somewhat longer than previously expected.” In addition to weakened demand for housing, Mr. Bernanke spoke about the issues of increased delinquencies and foreclosures, and the possible continuation of this trend in the next 2 years as many adjustable-rate sub-prime loans face interest rate resets.
The latest predictions of foreclosures paint a grim picture. HousingPredictor.com forecasts more than 250 local housing markets futures in all 50 states, and has maintained more than an 85% accuracy rating. Based on a survey of the nation’s 100 largest real estate markets, HousingPredictor.com predicts that at least 2 million residential properties will be foreclosed within the next two and a half years.
Another study by the Center for Responsible Lending predicts an even worse scenario. This non-profit organization, which focuses on abusive lending practices, is forecasting a total of 2.4 million foreclosures nationwide. The figure exceeds the 2 million homeowners thought to have been created by the housing boom (2 million being the most optimistic estimate).
The latest reports show the number of existing homes for sale nationwide jumped 10.4% at the end of April to 4.2 million, equal to 8.4 months’ worth of sales at the current selling rate. The number of unsold properties relative to sales hit a 15-year high. One can only imagine the effect on home prices should 2 million plus foreclosed properties be added to the growing glut of inventory for sale.
Sphere: Related Content
Leave a Reply