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There’s always something to howl about

The good news in the housing market? We may be witnessing the beginning of the end of the bad news in the housing market.

From The New York Post:

The latest numbers suggest we’re finally at the beginning of the end of the housing correction — no thanks to Washington.

Last Thursday’s numbers from Realtytrac seemed like bad news. In August, foreclosure auctions hit their second-highest monthly total in the report’s history: 147,003, up 9 percent over the month before and up 2 percent over August last year. That’s 7 percent below the peak month, March of this year.

And the immediate precursor to foreclosure sales — bank repossessions — hit their all-time high in August: 95,364, up just 3 percent over July but 25 percent over August 2009. That makes the ninth straight month repos have increased on a year-over-year basis. But foreclosure is a pipeline — and those numbers are the outflow end of it.

On the inflow end, things are slower. August saw 96,469 default or foreclosure notices go out, a 1 percent drop from July and a 30 percent fall from August 2009. And that marks the seventh straight month new foreclosures have fallen on a year-over-year basis. This trend — increased “outflow” and slightly reduced “inflow” foreclosure activity — means that lenders and loan servicers are 1) giving up on modifying mortgages when the borrower can’t pay, and instead repossessing homes and auctioning them off, but also 2) trying to manage the foreclosure pipeline to minimize the downward pressure on home prices.

Why isn’t this bad news? For starters, a multiyear tidal wave of foreclosure sales has been inevitable ever since the housing bubble burst: Too many people had mortgages they couldn’t afford to pay, mortgages with a face value higher than the home’s new market price. There’s never been any way for prices to start heading back up until they first find their bottom — which won’t happen until those bad mortgages are cleared away.

President Obama’s $75 billion mortgage-modification program was always going to be a huge failure — you just can’t keep people in homes they can’t afford — but now the markets are admitting it.

Related posts:
  • Zero Hedge: “Presenting: The Housing Bubble 2.0″
  • ZeroHedge: “Here’s the simply math: there will be no housing bottom until the 9 million excess homes clear.”
  • Ho-hum: Sky doesn’t fall after all

  • 1 comment

    1 Comment so far

    1. Jeff Brown September 21st, 2010 12:24 pm

      “There’s never been any way for prices to start heading back up until they first find their bottom — which won’t happen until those bad mortgages are cleared away.”

      It’s been my take for quite awhile now that prices will be lower on Christmas day 2011 than they are today, though a few areas will almost, but not quite be immune.

      It’s the time it takes for the tsunami to come and go, AND the time it takes to clean up after it’s gone. I think that’s what might take quite awhile to accomplish.