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Zillow.com just came out with a heart-warming holiday's greeting: Home prices are projected to lose $1.7T in 2011, or 63% more than this year. It's a good analysis, but I feel they left out two important factors.

1. With mortgage rates rapidly rising, refinancing becomes even more difficult, price pressure goes up, and buyers have an even harder time to get financing.

2. The legal wrangling on foreclosure documentation and fraud mess seems far from over. If foreclosures and/or some other forms of resolving the bad debt keep flowing, it lessens the problem- even though it may cause the price to show larger declines. But such is not the case, as the average loan in foreclosure hasn't made any payment for 16 months (Yeah, free house!) and foreclosure inventory keeps rising. To the extent delinquencies remain in the pipeline without resolution, they'll continue weighing down the housing market, the economy, and to some degree being the tail wagging the unemployment dog.

But you can always say the glass is 1% full.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 2 More Reasons Housing Prices Are Going Down 63%+ This Year