Smalltownbanker

Delinquent Mortgages Equal to Three Times the Balanced For-Sale Inventory

Common sense tells me that a high percentage of those homes listed for sale have delinquent mortgages. There is also consideration that a percentage of mortgages are always delinquent but do not always end in default. There lots of assumptions in that chart and it results in figures that look much worse than reality.

Property Values Set to Fall 43% from Current Depressed Levels

By the way. The 43% figure is way too high and will not happen. Call that a predicition if you like...

Property Values Set to Fall 43% from Current Depressed Levels

Two invalid assumptions.
One is that Case Shiller's index accurately measures a market like the current market where such a high percentage of sales are foreclosure activity. Clue: It does not.
Two is that the second chart shows an increase in government lending acitivity. Lending funded by private securitization has virtually disappeared but the total lending has significantly declined also. Granted the percentages have shifted dramatically towards government backed programs but it would be interesting to see this correlated to a total lending volume by agency chart. I think the biggest shift you would find is the increase in FHA is coming from a decrease at Fannie / Freddie and not from the private securitization arena. Credit policy changes have eliminated the market that was served primarily by private securitizations.

Once the Job Market Comes Back, The Housing Market Will Cure Itself

First you must acknowledge that the homeowners who are losing their homes to forclosure are unable to return to the market and qualify for a mortgage for a minimum of 3 years since subprime lending is essentially gone. Assuming that the housing market will recover as soon as the job market recovers is naive.

In order for the job market to recover housing must begin to stabilize and that will not happen until the people who cannot afford their homes have lost them or their mortgages have been successfully modified by the servicers. I expect to see housing stabilize in about 12-18 months followed by a recovery in jobs.

I also expect that new home construction recovery will be slow and that there will be significant differences in what is built. Smaller, more efficient homes will replace a significant portion of the McMansions.

June Case-Shiller Housing Numbers

Shoddy workmanship, substandard materials (vinyl siding), inadequate inspections, high density development and the loss of 20-40% of value is a common occurance across the nation right now, even in rural markets. The sad part is that many small banks have just begun to foreclose on loans that have been dead for a long time due to regulatory visits and sanctions. Look for a wave of small to medium size bank failures in the next 12 months, leading to even lower home sales prices.

NAR's Lawrence Yun Continues to Mislead on Housing

Just like everyone else you paint with a broad brush. All markets did not experience hyperinflation of home values, in fact most of the market saw more normal appreciation. All markets are not seeing values crashing down but 0-10% will be the norm across most of the Nation. The crisis in Prime lending which you predict will not happen There will be limited failures due to fraudulent stated income loans and homeowners who have overextended themselves in other areas. In reality those are always with us. A property that is overpriced for a homeowner is significantly overpriced for an investor so I am not sure where your comment regarding rental property comes from. GSE's are now placing serious limits on the number of investment properties you can finance for one individual so this prediction is only good if you have cash. The housing price correction in some markets is largely over, in some markets is half way through, in some markets is just beginning and in some markets will never happen so overall the predictions made by everyone are true in certain areas. I would suggest shifting focus to opportunities instead of predicting doom and gloom. I guess it is comforting to you to know that your doom and gloom predictions will be well received by the losers.

S&P/Case-Shiller February Home Price Data

As a mortgage lender I can testify that higher down payment requirements are a reality and strict credit guidelines have eliminated some potentially good buyers. Restrictions imposed by the MI companies and Fannie/Freddie have seriously restricted access to high loan to value financing.

This is an over correction on their part but they are trying to survive. It will take a couple of years for things to settle down and for guidelines to moderate to an appropriate point somewhere between current standings and the nonsense which was going on over the last few years.

It will be a long time before we see significant availability of 100% financing again from anything other than government insured loan programs like VA & USDA.