More bad news may be on the horizon.

New round of foreclosures threatens housing market

By Renae Merle
Washington Post Staff Writer
Friday, March 12, 2010

The housing market is facing swelling ranks of homeowners who are seriously delinquent but have yet to lose their homes, and this is threatening a new wave of foreclosures that could hit just as the real estate market has begun to stabilize.

About 5 million to 7 million properties are potentially eligible for foreclosure but have not yet been repossessed and put up for sale. Some economists project it could take nearly three years before all these homes have been put on the market and purchased by new owners. And the number of pending foreclosures could grow much bigger over the coming year as more distressed borrowers become delinquent and then, if they can’t obtain mortgage relief, wade through the foreclosure process, which often takes more than a year to complete.

As these foreclosed properties add to the supply of homes for sale, they could undercut housing prices, which have increased modestly through December, according to the most recent figures in the S&P/Case-Shiller home prices index. That rise partly reflected a slowdown in the flow of foreclosed homes onto the market.

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The housing recovery mirage

With home prices rising even in California, it might seem that the worst is over for the housing market. But the good vibrations may be short lived.

NEW YORK (Fortune) — Is the housing bust over?

Shares of Toll Brothers (TOL), Hovnanian (HOV) and KB Home (KBH) and other builders have surged. The exchange-traded fund that tracks the group has nearly doubled since March.

Home starts have risen for five straight months, while sales of new homes recently hit their highest level since last September. Prices are up as well: the Case-Shiller index of national house prices rose 2.9% in the second quarter, ending a three-year decline.

These signs — as well as anecdotal reports about house shoppers growing more willing to write a deposit check — have executives at homebuilding firms declaring the worst is over.

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According to the Mortgage Bankers Association a reported record of 5.4 million US home loans were in distress in the first quarter of this year. That means 12.07 percent of all loans were delinquent or facing foreclosure procedures, The New York Times reported. In the fourth quarter of 2008, 11.93 percent of all mortgages were in distress.

“It does not appear the level of mortgage defaults will begin to fall until after the employment situation begins to improve,” said Jay Brinkmann, the association’s chief economist.