CHESSNOID

There are many claims that the recession is over.  Technically speaking it is.  However the effects of the recession continue to linger and actually get worse.  What originally brought not just the United States but the entire world into the global recession was the US housing bust.

Has the housing bubble that burst already stopped leaking?  Unfortunately it has not. There is a tsunami wave of foreclosures that many economists and housing bust bloggers predict on the horizon.  Now a new bloomberg article puts the number at about 7 million homes.  This number is the biggest one I have seen and above the other loan delinquency forecasts.

Sept. 23 (Bloomberg) —

The crash in U.S. home prices will probably resume because about 7 million properties that are likely to be seized by lenders have yet to hit the market, Amherst Securities Group LP analysts said.

The “huge shadow inventory,” reflecting mortgages already being foreclosed upon or now delinquent and likely to be, compares with 1.27 million in 2005, the analysts led by Laurie Goodman wrote today in a report. Assuming no other homes are on the market, it would take 1.35 years to sell the properties based on the current pace of existing-home sales, they said.

Helping to stoke speculation the housing slump has ended, an S&P/Case-Shiller index for 20 U.S. metropolitan areas showed the first month-over-month increases in values since 2006 in May and June, reducing the drop from the peak to 31 percent. Echoing other mortgage-bond analysts including those at Barclays Capital Inc., Amherst cautioned that a change in the mix of foreclosure and traditional sales over different parts of the year lifted prices in the period, as the distressed share shrank.

“The favorable seasonals will disappear over the coming months, and the reality of a 7 million-unit housing overhang is likely to set in,” they said.

If these forecasts turn out to be right, the economy may go back into a deeper recession. The housing market needs to be addressed by the Obama administration not with just words but by action. One of the reasons why the Obama administration is having a difficult time getting the majority of people to believe in his health care reform ideas is that he has not delivered in saving the economy as promised. Other reasons are he has not withdrawn the troops from Iraq and he has not made the government and its dealings more transparent.