What follows here is largely a synopsis of this article.
Demand for housing remains tepid as job growth is weak, the unemployment rate remains above 8% into 2011 and the negative inventory trends prove too much for the real estate market to overcome. Ultimately, home prices are very likely to decline 7%-15% over the course of the coming two to three years.
We've seen clear evidence in recent weeks that the housing double dip is in process. Price declines have varied depending on different reports with the decline of prices of new homes reported as much as minus 13% year over year. The problems in housing are not going away and continue to be a problem of supply and demand.
If you're attempting to visualize the problems in the housing market look no further than the following three charts (via Mortgage News Daily):
Read more here.
As CNN points out:
U.S. home prices fell 2% in the third quarter after having gained steadily since early 2009.
The S&P Case-Shiller Home Price Index has recorded gains in four of the previous five quarters, including a 4.7% jump between April and June 2010. That leaves national home prices down 1.5% year over year and off 2% compared to the second quarter, according to the Index, which was released Tuesday.
The inventory of homes is high with nearly 3.9 million on the market in October, according to the National Association of Realtors. That means it would take 10.5 months to sell through all of the current inventory. In a normal market, there is usually a six-month supply.
Plus, there's a massive shadow inventory of homes waiting in the wings. These are homes that are deeply in the foreclosure process or even repossessed by banks but not yet put back on the market.
Much of the massive shadow inventory of homes is due to
the fraud involved with mortgage documents.
As CNN notes in a second article:
Big banks are having trouble restarting the foreclosure process after this fall's "robo-signing" scandal, and the once booming market for foreclosed homes has been hit hard as a result.
According to ForeclosureRadar , the number of properties coming to auction in hard-hit western states -- Arizona, California and Nevada -- has dropped more than 30%.
Investors had been doing brisk business, buying distressed properties on the cheap, sprucing them up and flipping them. But now they are being far more cautious.
"Their concern is that homeowners will be more aggressive in fighting foreclosures even after the auction sale," said Sean O'Toole, CEO of ForeclosureRadar .