The continuing housing slump
According to a few new analyses, you can expect home prices to remain pretty depressed over the next few years.
The process that begins with a homeowner falling behind on payments and ends with someone else buying the house is long and slow. It includes going into foreclosure and then trying to negotiate out of foreclosure and then failing and then a legal process and all the rest. A lot of homes are in the early stages of that process now, and 5 million of them are estimated to come onto the market in a few years. But that will take years, and in that time existing housing stock will depress demand for new housing stock, and thus demand for all the economic activity associated with building a house.
As you can see in the Calculated Risk graph above (click on it for a larger version), the foreclosures are concentrated in Arizona, California, Florida and Nevada, and will particularly slow their recoveries. And Arizona, California, Florida and Nevada all have competitive -- or potentially competitive -- Senate elections this cycle. This isn't good news for the incumbents.
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