And the hits keep on coming.
This is not good.
In a nutshell what Karen Weaver is saying is the following:
Foreclosure rates in the U.S. remain near record highs. More than 13% of American homeowners with a mortgage are either behind on their payments or in foreclosure. The latest report from the Mortgage Bankers Association, released today, shows the percentage of loans that entered the foreclosure process dipped slightly to 1.36%, down from an all-time high of 1.37% in the first quarter.
However, that number may soon rise again as mortgage delinquency rates continued to climb in the second quarter.
That news is no surprise to Karen Weaver of Deutsche Bank. She startled everyone a few weeks ago when she predicted that, by 2011, nearly half of American mortgage holders would be underwater (meaning that they'll owe more on their mortgages than their houses were worth).
Here's the link to her report.
This is just further evidence that any talk to recovery is premature. In fact the next wave of foreclosures could be far more devastating since it will be accompanied by the credit card meltdown.
We also have to remember that there is a significant amount of inventory from houses to condo to dead malls that are remaining stagnant. Real estate and mortgages are going to have a crippling effect on our economy for quite sometime.
If you are not aggressive in your savings and frugality, this is the time to do it. That means reducing your expenses and looking for added value in all your purchases. So cut to the bone. I know I am. More on that later.
As for buying a place. I still think buyers are going to be in the driver's seat for a long time coming. So feel free to take your time. Sellers, if you need to take a hit, then take a hit on the price. If you have the financial and mental wherewithal to stick around then wait. But it will be a long wait my friends.