Despite the media’s repeated claim that inventory is lower-than-ever, the shadow inventory of distressed homes (that’s set to come onto the market) will take a sizable chunk out of prices and increase the number of future defaults. There’s probably never been a worse time to buy a house. A “60 month” backlog of foreclosures means that there’s 5 years of distressed homes in the pipeline.
Who knows how low prices will go? Here’s an excerpt from a post at Calculated Risk:
“January Home Price Index Shows Sixth Consecutive Monthly Decline: [CoreLogic January Home Price Index report] shows national home prices, including distressed sales, declined on a year-over-year basis by 3.1 percent in January 2012 and by 1.0 percent compared to December 2011, the sixth consecutive monthly decline.”
According to last week’s Case-Shiller report, housing prices fell to their lowest point since the bubble burst.(down 34 percent) But the data in that report only goes to December 2011. This new report covers January, 2012, and it shows that prices have slipped even more. And this is BEFORE the wave of foreclosures hits the market.
Fortunately, President Obama has devised a plan that will reduce the number of foreclosures, shore up dwindling home equity, and keep as many victims of this banking scam in their homes as possible.
How? By providing lavish subsidies to the same group of bottomfeeding card-sharks who triggered the crisis to begin with. Don’t believe me? Just look at this.
It’s so frustrating to watch Obama go through all these contortions when the solution is right there at his fingertips. Just reduce the principle on underwater mortgages and hit the reset button. That’s all there is to it. Make the people who caused the crisis, pay for it. That’s how you fix housing and get (some) justice for the victims at the very same time.
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