Forecasts call for more home value losses in 2011 and ahead

Are the Banks getting into the home-ownership business in Orlando?

The so called recovery doesn’t seem to be happening and if you have been watching, the real-estate prices have been on a fairly steady decline since the bubble burst.   If you are thinking of buying some “bargain” real-estate you might want to think twice.   According to ForeclosureRadar.com, the percentage of lenders seriously delinquent and in some stage of foreclosure is over 15%, yet the percentage of properties being sold for the same period is running around 1%.

The Foreclosure Crisis - On hold?

Serious delinquencies up,  foreclosure starts up, but sales amount to a tiny fraction.

So what is happening with the other 14% of the properties that should be being sold each quarter?   They are being added to a massive shadow inventory because the banks are not willing to flood the market and crash prices.  The banks are systematically dumping at a controlled rate keeping home prices at a slow, but steady decline.

Is the Bank waiting on purpose?

A friend of mine recently admitted filing bankruptcy, which was completed in December of 2009.  His family gave up the house in the foreclosure.  It has been 13 months since his bankruptcy was finalized, so as far as I know that means he doesn’t even own the house anymore. He doesn’t receive any bill from the mortgage company and he doesn’t have a clue when he will be forced to move out.

My friend isn’t complaining, it is allowing him to save cash for when he has to find a place to live.  He assumes he will need to put a very large security deposit to rent a house since his credit is shot.  I know several other people in my neighborhood living in their houses waiting to be kicked out.  Many houses are vacant, the prior owners moved out because the cost of keeping the house up was more than renting a small apartment.  Many houses are becoming in a poor state of repair which I am afraid will further hurt the so called recovery.

Predictions of home price decreases for 2011 – Credible Sources

1. Forbes. A report from leading news source Forbes predicts that home prices may fall another 20% in 2011.
2. Moody’s Analytics. Chief Moody’s Analytics Economist Mark Zandi expects declines but not as badly as Forbes estimates.  Zandi predicts approximately an 8% decline through the third quarter of 2011.
3. The Wall Street Journal.  Nick Timiraos reports that economists and housing analysts predict home prices will bottom in 2011 but not to expect a recovery until sometime the following year.
4. TIME Magazine. An article in TIME says that we haven’t quite reached the bottom but it’s almost there.  Time didn’t expect a recovery until as late as 2013.ost there.
5. Warren Buffet for Berkshire Hathaway. Early in the year investor Warren Buffet was predicting that the housing market problems would be behind us by 2011.  Many sources are saying he was too optimistic.
6. Zillow. Chief Economist Stan Humphries is on board with Time and WSJ that we are close to an impending bottom of the housing market. He notes that the rebound will be slow and offers no prediction about when the market will be back on track.

How many people do you know that have lost a job and stopped paying the mortgage?

In Central Florida the number of people on unemployment and who have stopped paying the mortgage to use money for bare necessities like water, electricity and food is alarmingly high.  Five years ago I didn’t know of a single person who was having trouble financially and now the number is probably close to 50% of the people I know– and my circle of friends are mostly middle class families who had modest incomes of maybe $150,000 yearly and houses that sold for $350-450K when things were good.

I tend to be a realist so don’t want to admit how bad I think things are.  I’ve read several predictions of “mid-level” priced could see a 30% drop in 2011 if shadow inventory is dumped, particularly areas hardest hit like Florida, California and Nevada

Do you know of any strange situations like I’ve described?  If so please share them.

Here is a link back to the article where I found much of this information.

http://dailybail.com/home/national-average-492-days-from-default-to-foreclosure.html?source=patrick.net#siteTitleWrapper