No light at the end of the tunnel for Housing disaster

By Rick Moran

The news on the housing front is just awful - no other word for it. If the economy is going to turn around then the housing market is going to have to stabilize. And judging from stats published yesterday, we are a long way from any kind of recovery.

David Dickson of the Washington Times has the grim news:

Home prices continued to plunge across the nation in March, and record foreclosure filings in April amid a huge overhang in housing inventory mean that home prices will continue their descent, analysts said Tuesday.

The S&P/Case-Shiller 20-city home-price index plunged 18.7 percent in March from a year ago. A separate S&P/Case-Shiller national home-price index sustained a 19.1 percent decline through the first quarter compared with the first quarter of 2008, the biggest descent in its 21-year history. Nationally, home prices have fallen 32.2 percent from their peak level in the second quarter of 2006.

Home prices in the D.C. area were down 18.4 percent over the past 12 months and 33.9 percent from their May 2006 peak.

"Declines in residential real estate continued at a steady pace into March," said David Blitzer, chairman of the index committee. "We see no evidence that a recovery in home prices has begun."

For the 20-city index, home prices have now fallen to their April 2003 levels.

"This suggests that, depending on the type of mortgage and the length of the mortgage, most homes purchased or refinanced over the last six years may now be under water - worth less than the mortgage," said Charles W. McMillion, chief economist at D.C.-based MBG Information Services.

It's even worse than that.

Foreclosures in April were up on average 32% over last year. Florida's rate is up 75% over last April's numbers.

And then there's this:

Record plunges in household net worth and soaring job losses have also been affecting foreclosures and home sales. During the 18-month period ending in December, the Federal Reserve has reported that household net worth plunged nearly $13 trillion.

That's not government money or monopoly money. That $13 trillion represents the net worth of real people that has simply disappeared. And it doesn't look like they'll be getting it back anytime soon.

Of course, this means that the chances of economic recovery occurring the second half of this year are fading rapidly. Until the market can find bottom, the economy will continue its slide.