Foreclosures in 2010 were just the tip of the iceberg as banks are predicting that at least a million more homes are set to enter the repo market early this year.
Added to the the mess is rampant unemployment on top of even tougher lending standards and you have a mixture of too many houses with too few qualified buyers leaving the housing problem in
extended- double limbo.
Basically there are just too many homes and not enough buyers, which drives prices further down. And the
road to ruin is forcing more people to walk away, which keep
s the foreclosure machine grinding out more empty houses that no one can buy.
The machine is well oiled and running at full capacity- fed by the banking empire in its attempt to stave off its own
looming demise. The empire needs the fuel to sustain its
sacred balance sheet which suspends for a time the
lie that they are fiscally sound.
From 2006 to 2011 housing values have plummeted and are expected to bottom out at 40% Which is great if you have the ability to snap up a bargain -but not so great if you are stuck with a house that has lost 40% its value and you are still paying what it used to be worth. Home ownership has been so decimated that right now we are at 1998 price levels.
Over a million homes were repossessed in 2010 with pitiful few being resold. According to the Mortgage Bankers Association there are
right now-eight million Americans who are a month behind on their mortgages. Five million are at least two months behind and one million more will getting kicked out this year.
Deutsch Bank projects that 48% of all mortgages in America with have 0 equity at the end of 2011.
Real ghost towns are beginning to emerge in certain areas. New Orleans has a 21.5% rate of empty houses. Dayton Ohio has 18.9% empty. Even people
with jobs are having a harder time getting a loan. The financial institutions have tightened lending standards and are requiring more from buyers than ever before.
Government has made it worse in its effort to avoid another credit crisis, borrowers need bigger downs and can expect to pay higher fees to cover risks-with better credit scores than before. Plus government guaranteed loans are coming with higher premiums for government backed mortgage bonds.
Only 47% of all Americans have full time jobs so all this recovery talk seems nothing more than hot air. Until the job problem is addressed there will be no housing recovery. It takes an income to buy a house-until that gets better the rest is just rhetoric.
And this was before the crisis in Japan.
The big scam
Banks continue to hold onto their REO
(real estate owned) inventory.Why is this you ask?
The biggest reason - if they move a property off their books, they have to take the loss. If they keep it on their books, they can value it much higher, making their balance sheet look better. And, many of these banks, especially the huge ones, have separate divisions that are responsible for maintaining the bank's REO property.
What most people don't realize is that when a foreclosed home is finally sold, the original mortgage holder does NOT get paid back first, it's the people who maintained the property that get paid first.
Obviously, these divisions that maintain the property are charging $100 to cut the grass, meanwhile they pay some guy $30 to do it. They are marking up everything - lawn maintenance, snow removal, etc... They even charge extra fees for paying the property tax. Remember, in most cases, the companies that maintain these foreclosed properties are actually
subsidiaries and divisions of the large banks who are the mortgage holders.
So, contrary to popular belief, the longer a home sits vacant, the more profit a huge bank can make.
Now there is a new fear looming over 2011 called
stagflation-which means high unemployment and inflation occurring at the same time-and even as the Federal Reserve prints money as fast as it can to slow it down signs are beginning to emerge that inflation is here to stay.
Now that gas costs more and food costs more pretty soon everything will cost more to live in that house that is worth nothing. And don't forget you won't be making more to make up the difference-unless you get another part-time job.
The Federal Reserve just released their Flow of Funds Report and U.S. households have lost $6.3 trillion in real estate wealth from the peak.
This kind of inequality is rare and the last time we saw this kind of wealth inequality divergence we ended up in the Great Depression.
If you look around there is loss as far as the eye can see- unless you are one of the thieves living behind the walls of a beautiful gated community.
If so you might want to invest in a moat.
Welcome to the lost decade.
ickenittle