We are officially in the middle of the worst housing collapse in U.S. history - and unfortunately it is going to get even worse. Already, U.S. housing prices have fallen further during this economic downturn (26 percent), then they did during the Great Depression (25.9 percent). Approximately 11 percent of all homes in the United States are currently standing empty. In fact, there are many new housing developments across the U.S. that resemble little more than ghost towns because foreclosures have wiped them out. Mortgage delinquencies and foreclosures reached new highs in 2010, and it is being projected that banks and financial institutions will repossess at least a million more U.S. homes during 2011. Meanwhile, unemployment is absolutely rampant and wage levels are going down at a time when mortgage lending standards have been significantly tightened. That means that there are very few qualified buyers running around out there and that is going to continue to be the case for quite some time to come. When you add all of those factors up, it leads to one inescapable conclusion. The "housing Armageddon" that we have been experiencing since 2007 is going to get even worse in 2011.
There are a lot of grim facts in this article, but this is one of the grimmest:
The housing market is not like other financial markets. It is difficult to artificially pump it up with funny money. If the U.S. housing market is going to rebound, it is going to take lots of average American families getting qualified for loans and going out and buying houses. But they can't do this if they do not have good jobs. Today, only 47 percent of working-age Americans have a full-time job at this point. Without a jobs recovery there never will be a housing recovery.
Without a jobs recovery, there will never be any kind of a recovery, including the deficit reduction that is all we hear about from D.C. these days. There is no acknowledgement of how serious the unemployment situation really is.
This is not good news for the homeowners who are locked into mortgages that are now higher than their homes are worth. It's not good news for communities full of empty houses. Every other house on my street is for sale; there are no jobs here. Those houses will stay on the market for years and years.
Meanwhile, as the number of empty houses increases, the number of apartments decreases. From the Houston Real Estate Observer:
The nation is heading for a shortage of apartments, the result of several years of weak multi-family construction, according to the National Association of Home Builders.
“We are going to have a supply/demand imbalance and we will have rental increases,” said Sharon Dworkin Bell, senior vice president of the multifamily division of the NAHB.
Rental increases will likely translate into more homelessness amongst the working poor.
cross-posted at MainSt/workingamerica.org