A record number of U.S. homes were were foreclosed upon in the second quarter of 2010, raising concerns that, after years of high home losses, the home foreclosure crisis is not getting any better. Banks repossessed 269,952 U.S. homes this quarter, a 38 percent increase from the same quarter in 2009. Just how bad is this?
- Crisis Will Worsen Without Job Creation The Los Angeles Times' Alejandro Lazo reports, "If that pace continues through the year, the number of homes taken by banks is likely to top 1 million by the end of 2010, said Rick Sharga, RealtyTrac senior vice president. 'It is almost a certainty that we will see over a million over the course of the year, and that would definitely be a record,' he said. 'It's serious, but it doesn't appear to be that these levels will crater the housing market if the economy at least stabilizes and we do start to see some job creation.'"
- Silver Lining: Long-Term Decrease The Atlantic's Daniel Indiviglio writes, "Foreclosures continued their slow decline in June, falling at the same month-over-month rate of 3% as in May ... But more importantly, the annual decrease hit 7% -- the biggest drop we've seen since the housing bubble burst. While a positive sign, it's not clear if this is just an indication that fewer borrowers are losing their homes or that banks are holding back more shadow inventory from hitting the market. ... Unless banks are really working hard to hold back defaulted properties from hitting the market, there's a clear trend here in foreclosure activity slowing down."
- ...Due Mostly to Now-Ended Tax Credits 24/7 Wall Street's Douglas McIntyre dashes the optimism. "That hope many be short-lived. Tax credits available for home purchases ended in April which means that demand for distressed inventory will likely fall. ... People who might have been home buyers have abandoned the market, once again pushing down demand that might give the housing market some relief."
- Don't Forget 'Hidden Inventory' Econoblogger Yves Smith points out, "The scary part here is this estimate of market overhang refers only to foreclosed and distressed property. There is another category of hidden inventory, people who would like to sell but aren't even listing their houses. These would include people who want to relocate, aging individuals who'd like to downsize and had hoped to be able to liberate some equity."
- Blame the Homebuyer Tax Credit Conservative blogger Ed Morrissey fumes, "It seems as though the two tax credits took all of the demand from this quarter and moved it up into earlier quarters. Now that the artificial stimuli have ended, most of those who intended to buy have already done so in order to take advantage of a useless taxpayer subsidy of the sales. There remains only a historically small demand among those who either didn't qualify for the tax break or didn't need it, or perhaps a cadre of buyers who think that Congress will create yet another subsidy for sales and are waiting them out."