Housing: Owners Become Renters - Unstoppable Trend

After five straight quarterly drops, foreclosures nationwide shot up 14% from the 2nd to the 3rd quarter of 2011. Not news...but why is this still happening? Simply stated, the underlying causes of the original crash in housing have not cleared.

- Millions jobless, millions more without a job for two or more years, spell doom. Six out of 10 of the "top turnaround towns" had jobless rates above 10% in the 3rd quarter. Wages are also falling, for those who are 'lucky' to have a job - as wages fall, buyers become scarce.

- Mortgage rates at record low are not enough. The "real" mortgage rate - which factors in falling market values is 8%. The real cost of buying must include the 4% interest rate and the 3.9% average home prices decline over the past 12 months.

- Obama's misguided foreclosure bailouts are stalling the clearing of inventory. Until all distressed houses are cleared, the 'bottom' in prices will not be achieved. As prices continue to fall, buyers continue to stay away.

- Fannie Mae and Freddie Mac hold an incredible 70% of all mortgages nationwide, and are in bankruptcy. As has been shown in earlier blogs, these two GSEs created the housing bubble/crash in subprime underwriting, and buybacks.  Under Obama, the poisonous practice is still in place.

- Banks were stung by the crash, and were technically bankrupt. Mortgage lending has dried up, lending requirements more stringent, so much so, that all cash buyers have a tough time qualifying for a loan. Banks make their money now playing the spread between .5% Fed money, and 1.5% treasury bond yields. Can you blame them?

Home owners are being turned into renters.  Baby-boomers will be working till age 80, renting, in essence, starting over.  Obama's failure to re-ignite the economy hints that the worst is yet to come.

Boomers Warning: Avoid These Retirement Pitfalls
CBO: Obama Stimulus Downgraded - Negative Economic Effect
National Realtors Games Sales Numbers For Three Years