We’ve been predicting a double-dip slump for housing ever since rosy reports about the economy began circulating through the media. Here are some of the indicators that I watch.
- Shadow inventory – This is housing inventory on the sidelines waiting for a good time to enter the market. As this inventory is put on the market, prices will be suppressed.
- No Alt-A market for self-employed borrowers with good credit – Large swath of the potential borrower pool is unable to refinance or purchase.
- 20%+ of homeowners have negative equity.
- Interest rate increases loom. A 1% rise in interest rates will deflate any momentum gained.
We have a long road ahead.
Unfortunately, “the accelerating share of negative equity, combined with deteriorating economic conditions, means that mortgage risk will continue to increase until home prices and the economy begin to stabilize,” said Mark Fleming, chief economist of First American CoreLogic, in a news release.”
Simpson said the sand states – Arizona, California, Florida and Nevada – are truly the only states that matter when discussing foreclosures, adding that 70% of all foreclosures are located in 10 states.
“We are in a double dip and now heading back down,” Simpson said. “And I think it’s safe to say government policy affirmatively and actively hurt people by encouraging them to buy into a falling market.”
“The housing market recession is not yet over,” said Blitzer, “and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing.”