1. buyer’s credit ending. The credit has pulled forward new home buyers, look for tepid new home buying for the next couple of years.
2. Waves of foreclosures coming. Several million are in the loan modification process. Few are getting mods, and even those that do, 30 to 50% will redefault in the next year or two anyways.
3. 90-day late payments on mortgages are skyrocketing, up 50% in a year, 100% in 18 months, yet foreclosures haven’t increased at all in that time frame. I personally know SIX people not paying their mortgages, one for over 24 months, and not a foreclosure filing on the bunch yet… A foreclosure delayed is not a problem solved, this inventory is still coming.
4. Continued job problems; The overall economy may be stabilizing, but read any local paper and see how many teachers/fireman/city/county employees and programs are being cut. These are homeowner type jobs, and foretell continued pressure on the housing market.
5. Unsustainable flipping. The fliptards are hard at it: buy a bnak owned home, slap some paint/granite/tile/carpet on it, and viola! $30K profit. However, without a steady supply of first time buyers, the “flip it and they will come” strategy will backfire. Sure, it makes the market look better: less distressed inventory, higher prices, but it will simply be another chapter in the downslide, when the flippers start eating big losses late this year, early next.