Saturday Nov 26, 201106:05 PM GMT
Quick Facts: US Housing Crisis
Sat Nov 26, 2011 6:7PM
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Experts say more foreclosed homes are coming onto the U.S. housing market and U.S. home prices are still dropping. They believe the housing problem would have been solved if the Federal Reserve could keep long-term interest rates down for the next 10 to 20 years. But interest rates will have to rise sooner rather than later as inflation becomes a problem in America.

 

Housing Market Bubble

 

The United States housing bubble is an economic bubble affecting many parts of the United States housing market in over half of American states. Housing prices peaked in early 2006, started to decline in 2006 and 2007, and may not yet have hit bottom as of 2011. Market Watch

 

On December 30, 2008 the Case-Shiller home price index reported its largest price drop in its history. Market Watch

 

In October 2007, the U.S. Secretary of the Treasury called the bursting housing bubble "the most significant risk to our economy." AFP

 

According to the National Association of Realtors, U.S. home prices fell in three-quarters of all metropolitan areas in the third quarter of 2011. The median price of homes in the U.S. was down 4.7% in the third quarter of 2011, compared to the same period of 2010. Benzinga.com

 

U.S. home prices will stagnate through next year and only start recovering in 2013, according to economists polled by Reuters who also felt the stimulus options being floated will not do much to reinvigorate the market. Reuters

 

A pipeline of foreclosures and uneven demand will keep prices from rising this year, discouraging new-home construction and delaying a rebound in housing. Bloomberg

 

Shrinking home equity and an unemployment rate at over 9 percent are weighing on consumer spending, which accounts for about 70 percent of the economy. Bloomberg

 

John Herrmann, senior strategist at State Street Global Markets LLC in Boston says home prices in the United States have yet to find a bottom. "Buyers are incredibly cautious. They are concerned about the unemployment rate. There is uncertainty about the economic outlook." Bloomberg

 

Mortgages & Foreclosures

 

Increased foreclosure rates in 2006-2007 among U.S. homeowners led to a crisis in August 2008 for the subprime, Alt-A, collateralized debt obligation (CDO), mortgage, credit, hedge fund, and foreign bank markets. Bill Moyers Journal

 

By the end of 2010, almost 67 million mortgages were held in the name of the Mortgage Electronic Registration Systems, known as MERS. Rolling Stone

 

The mortgage industry stopped funding high-interest subprime mortgages and other risky loans in 2007, when the meltdown made it impossible to sell them. But the backlog of soured mortgages from that era was enormous and has been compounded by lingering official unemployment of about 9% nationally. LA Times

 

Experts say though November figures show that fewer home loans are in trouble, the U.S. is not even halfway through cleaning up the foreclosure mess. LA Times

 

It could take three or four years to return to a typical pattern of delinquencies and foreclosures, the Mortgage Bankers Assn. said in releasing its quarterly delinquency report in November. LA Times

 

The Center for Responsible Lending, a nonpartisan advocacy group that accurately predicted a foreclosure tidal wave in 2006, reported in November that 2.7 million American households had lost their homes as of February. The advocacy group, which analyzed 27 million home loans made from 2004 through 2008, estimated that an additional 3.6 million mortgages were in foreclosure or likely to fail. LA Times

 

The rate of homes in foreclosure was highest in Eastern and Midwestern states that route all home repossessions through the courts, with Florida at more than 14% and New Jersey at 8%.

 

Wells Fargo, the largest loan provider, said on June 16, 2011 that it was leaving the reserve mortgage business, following the departure in February of Bank of America, the second-largest lender. With the two biggest players gone -- together, they accounted for 43 percent of the business, according to Reverse Market Insight -- prospective borrowers may find it more difficult to access the mortgages. NY Times

 

According to a RealtyTrac report, a total of 3.82 million foreclosure filings - default notices, scheduled auctions and bank repossessions - were reported on a record 2.87 million U.S. properties in 2010, an increase of nearly 2 percent from 2009 and an increase of 23 percent from 2008. Realtytrac.com

 

According to a RealtyTrac report, 2.23 percent of all U.S. housing units (one in 45) received at least one foreclosure filing during 2010, up from 2.21 percent in 2009, 1.84 percent in 2008, 1.03 percent in 2007 and 0.58 percent in 2006. RealtyTrac.com

 

According to a RealtyTrac report, five states accounted for 51 percent of the nation's total foreclosure activity in 2010: California, Florida, Arizona, Illinois and Michigan. Together these five states documented nearly 1.5 million properties receiving a foreclosure filing during the year. RealtyTrac.com

 

ARA/KA

 

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