The Real State of the Housing Market

[Crewleader]

By Mike Whitney

April 22, 2010


Going ... Going ... Uh ... Still Going

Housing has been going sideways for seven months now, mainly due to lax lending standards (at FHA), the Firsttime Homebuyers Credit, and the Fed's mortgage-backed securities (MBS) buyback program. But once the props are removed, the market will fall sharply.

So where's the real demand for housing?

Here's a hint: There isn't any.

The market's in a shambles, decimated by years of fraud and perfidy. What was once a booming industry is now a abscess-ridden corpse that buyers are avoiding like the plague. And who can blame them? A new home is no longer a symbol of status and upward mobility, but a millstone to be shed at the earliest possible opportunity. The industry is facing an insurmountable PR challenge; how to take a "sow's ear" and stitch it into a Gucci purse. Good luck with that. Low interest rates and federal subsidies alone won't do the trick.

Despite the media-hype and cheery forecasts, the downhill slide has already begun. Here's the lowdown from Realty Check which sums it up pretty well:

"The average number of days from when a borrower stops paying on his/her mortgage to when the bank sends out the first foreclosure notice is 417....And the final foreclosure can take up to a year more. The government's Home Affordable Modification Program, which today the Inspector General for the TARP wrote, "has made little progress in stemming the onslaught".... is simply delaying the inevitable and in some cases kicking the can and the cost down the road for borrowers who will inevitably redefault and for taxpayers who will foot the bill." (Diana Olick Realty Check, CNBC)

http://www.counterpunch.org/whitney04222010.html