2012 Housing Market observations:
»Update to original post
•Twelve Million Mortgage Holders are now Underwater (Avg of -59K neg equity)
•Mortgage Delinquencies are rising (+60-day/FHA and Conventional)
•Foreclosures are accumulating (REO and pending)
•Shadow Inventory remains elevated (disclosed & undisclosed)
•Underemployment/Unemployment is stuck at 11+% (U3)
•Wages and salaries are stagnant (which lowers purchasing power)
•Food & Fuel Inflation remains elevated over 2010 levels
•Mortgage delinquencies will likely increase
•Overall housing inventory will likely increase
•Unemployment will remain in double-digit territory
•Real GDP will remain below 3% through Q3 of 2012
•Public and Private Debt is increasing
•Food & Fuel Inflation will remain high and may increase
As 2012 rang in, there were the so-called experts weighing in on the
Housing Market and their predictions for the new year. Most are choosing
to stand on the side of a declared price-bottom.
»The Fed’s January report stated that 12 million mortgages are
now underwater to the tune of an average –$59,000 negative per loan.
Adding to the already existing $700 Billion in negative home equity.
»So as distressed inventories keep increasing, prices will continue to fall.
Which means, these already negative equity mortgage holders will be
losing even more value in their homes. You can be certain that a portion of
these mortgage holders will be walking-away from their sinking ships…
DataAnalytcis, contrary to main stream prediction, is standing
across the proverbial street, and stating that most of 2012 will
not be the year of a price bottom. Perhaps their might be a start
to a trending uptick beginning in Q4, but only perhaps.
But with at least 1.6 Million units of shadow housing inventory
lurking- (mind you this is ONLY what is being disclosed and reported,
as it is widely believed that there could be upwards of double that figure)
on top of the 2.6 Million of existing units, (nar data is always suspect)
plus 160k of new homes and the approximately 1.5 Million units of
already foreclosed properties and clearly inventory levels are not subsiding.
The glut of approximately 5 Million to 6 Million total housing units with
a very likely probability of more distressed properties hitting the market
will keep pushing prices downward. Couple the massive inventory problem
with what is basically flat to little demand AND then add in the major issue of
unemployment to the housing depression mix for a real witches brew…
Fact: 39% of loans in foreclosure have not made a payment in two years,
and 72% have not made a payment in over one year.
• 2.36 million loans over 60 days delinquent.
• 1.84 million loans 90+ days delinquent.
• 2.17 million loans in foreclosure process.
For a grand total of 6.37 million loans delinquent or in foreclosure
as of September of 2011.
One aspect that is tethered to the unprecedented 22%-23%
underemployment/unemployment rate in the U.S.- is, the
pending 2012 presidential elections.
What do we know about all financial and economic markets? Easy.
Markets like stability, (for the most part) markets thrive in predictable
and certain parameters.
This includes the labor market and the housing market.
DataAnalytics thinks that one of the issues preventing the labor
markets from recovering, is the unpredictability and uncertainty
of the political landscape.
When a market and its manipulators know or have a very good idea of
who is calling the shots, it tends to be more or less predictable.
Fact: Companies are not adding enough jobs to lower the unemployment rate.
While there are various reasons for this; such as the increased costs of
employer-provided health benefits, along with the uncertainty of tax policy,
results in a reluctance to increase hiring or begin to hire. Which can be pinned
down to the current and often unpredictable administration currently in the White House.
But come November 2012, the markets will have a clearer path to its destination;
Whoever secures the White House in 2012, be it the DNC or GOP, the markets
will know what to fairly expect. Although, if this current and ineffective administration
retains the Presidency, the labor market will probably be very slow to improve if at all.
With other major and investment markets following suit.
Market surety is one of the keys to growth in our mixed-market free economy.
Replace abnormal market volatility with some sort of actual cohesion and
the indicators will begin to show signs of Real improvement.
The main issue facing our economy will be the implementation of said
cohesive force- that will enable hiring within the job market. Sounds
easy, right? Well as with almost everything, the delta between theory
and practicality remains vast. Philosophically, Socially and Politically,
those differences are just a few of the stumbling blocks on the road to recovery.
Collecting credible data is always challenge in this 24-7, online world.
With the enormous amount of data available, scattered widely
across the many spectrum’s of information, an independent researchers
job to mine reliable data is more difficult than ever.
Information and data collected and then disseminated by the government and
in-house organizations (such as the nar, BLS, nhba, Commerce Dept., etc.,)
usually results in biased and inaccurate reports.
DataAnalytics, an independent resource, always attempts to collect and verify
data then report all discovered information without bias.
Partial data in this report was collected from LPS, CoreLogic and RPX data.