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Anatomy of a Housing Crisis

By: Sol Palha “Freddie and Fannie certainly had a large role to play in the housing crisis and many may claim that they were the main contributors of the housing crisis which eventually resulted in a market meltdown.

Surge in Foreclosures is Predicted

By: Harold Bubil America’s real estate horror story is about to get worse; Realty Trac Senior Vice-President Rick Sharga says that another wave of toxic loan foreclosures is about to rock the market. It will be as bad as the peak of the subprime mortgage foreclosure spike in the winter of 2007-2008. By the fall of 2012, foreclosures will have returned to a normal level, making for six years of real estate hell in the US.

Ten Important Real Estate Charts

By: Dr. Housing Bubble The US housing market has been turned upside down thanks to unprecedented amounts of government intervention; there has been so much interference that even the seasonal pattern has changed.

Real Estate Will Lead Economy Into Depression

By: Simon Maiehofer Investors want to believe that the worst is over. Even though the data indicates a recession or depression, the general consensus is that ‘this time is different.’

Massive Supply, Faltering Demand

By: Charles Hugh Smith The fundamentals of the US housing market are simple: massive supply, falling demand. Pending home sales have dropped, hitting two records:

Massive Supply, Faltering Demand

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By: Charles Hugh Smith

The fundamentals of the US housing market are simple: massive supply, falling demand. Pending home sales have dropped, hitting two records:

the biggest drop and the lowest level of activity in recent history. In 2006, everybody who could afford a house already owned one; the credit bubble boosted home ownership to include those who were not creditworthy and the bursting of that bubble is taking down not only the unqualified, but also those marginalized by excessive debt and/or declining household income. Meanwhile, the supply of homes for sale or in default is climbing in all price segments, even the higher end.

Lenders fear that many of the 11 million homeowners who owe more than their house is worth will walk away from their mortgages, especially if the real estate market rolls over again, adding to the unsold homes inventory. This shadow inventory could reach 7 million homes, and require 8.5 years to clear. The total number of vacant dwellings in the US increased to a record 19 million in the first quarter of this year, yet new housing starts continue. Then there is the looming surge of mortgage re-sets that will continue through 2012 that, given the imbalance between supply and demand, could lead to a 50% decline in housing values. The US housing market is defined by rising supply and faltering demand, and a total dependency on a mortgage market propped up by government or quasi-government agencies that have shown poor risk management in service of sustaining or reinvigorating an unsustainable credit bubble. These government interventions have simply staved off the consequences of the supply-demand imbalance.

At some point these interventions will fail and the returns on the investment will go negative: all the trillions of dollars committed to propping up housing prices will fail to boost prices at all. At that point public support will evaporate and the market will finally get a chance to clear the imbalance between supply and demand.