US Housing Market Final Stage (REO) Foreclosures Target Six Million By 2014

By: Andrew_Butter

A Bank Repossession (REO) is the final stage of the foreclosure process that typically requires three foreclosure notices in USA. The REO is the point at which the bank throws you out on the street; but when the media report “X” many foreclosure filings in a month, that’s a mix of the 1st, 2nd and 3rd (final) stages.

The best source of information on foreclosures in USA that is in the public domain is RealtyTrac who collect and collate information on filings which happen at a local level. They are a research company so you pay for the information which is not public-domain (so you can’t publish it), although they do release snippets of information that are drip-fed out to the media, this analysis is based on collating that (public) information.

Ironically, since the disaster was created by government; and notwithstanding the huge amount of personal information that US citizens have to “share” with their government, which is sliced and diced a million ways, and can be used as “evidence” for prosecution (by the government); no agency of the US government collects or publishes data to document the extent of the fruits of the marvelous government funded market manipulation done, with the able assistance of Fannie and Freddie and attended by Wall Street.

That’s reminiscent of what happened when the Americans invaded Iraq; they didn’t bother to count the civilians who had been “collaterally damaged”. As if the numbers of Americans kicked out onto the streets due to the housing bust, is not something worth recording. I suppose that must be something to do with budget constraints, what with all the money that was spent invading Iraq?

Since the start of 2005 to the end of 2010, three million seven-hundred thousand American families have been kicked out onto the street. At an average of 2.3 people per household that’s 8.5 million Americans who have been directly, physically, affected by the popping of the US Housing Bubble, so far.

Ironically also, that’s about how many civilians were displaced, as in “de-housed” by the US campaigns in Iraq and Afghanistan, could that be a case of “what comes around goes around”?

I estimate that by the time the “dust” settles on they myriad of personal tragedies that resulted from the misguided policies of the Clinton and more importantly the Bush era, to “promote” (i.e. subsidize) home ownership, six million American families will have been “de-housed” , that’s 14 million personal tragedies.

The last time I looked at that was in September 2009 using data up to June 2009.

http://www.marketoracle.co.uk/Article13143.html

At that point, after taking into account the dynamics of the foreclosure process, and the backlog that was obvious even then (in 2007 it took an average of 151 days from the 1st notice until the occupants were kicked out, in 2010 it took an average of 400 days), I estimated the cumulative would be six million. One and a half years later, the dynamic is pretty much in line with that forecast, although I reckon the total by end 2016 might reach 6.5 million.

The good news is that it looks like America has passed the half-way mark of that sad process, the bad news is that it looks like it will take at least until 2014 and perhaps a few years after that, for all of the “mal-investments”  that were made, particularly in 2006 and 2007 to get “washed-clean”.

That projection is pretty much in line with the thesis that house prices in USA will not return to their “fundamental” until 2016 or so, which means that for anyone with money, now is a great time to buy, and for anyone who held on this long, it’s probably worth holding on “just” a few more years (years remember, not months).

http://www.marketoracle.co.uk/Article25597.html

By Andrew Butter

Twenty years doing market analysis and valuations for investors in the Middle East, USA, and Europe; currently writing a book about BubbleOmics. Andrew Butter is managing partner of ABMC, an investment advisory firm, based in Dubai ( hbutter@eim.ae ), that he setup in 1999, and is has been involved advising on large scale real estate investments, mainly in Dubai.

© 2011 Copyright Andrew Butter- All Rights Reserved
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