Many economic indicators are looking up lately. As we put more daylight between the present day and the Great Recession, there are a host of reasons to be optimistic.
S&P 500 corporations, collectively, are delivering blowout first-quarter earnings that are up an average of nearly 20% over Q1 2010 numbers. The Dow and S&P are up about 90% from March 2009 lows, and up about 23% in the last 12 months. Though the headline unemployment rate is still pretty high, the job market improved in 39 of 50 states last month.
To be sure, there are also reasons to be glum. Inflation continues to eat into family budgets and businesses, federal spending is spiraling out of control – and of course, the housing market remains as bleak as ever.
I have recently written on inflation (read my column on 9 signs inflation is crushing America) and on U.S. budget woes (read my column on 3 budget problems that dwarf the debt ceiling). You can get details on those economic problems in my previous writings – but today, I’d like to point out just how bad it is in the housing market.
Here are 7 signs that, despite some stabilization, housing is headed for a double-dip in 2011:
Millions More Foreclosures Forthcoming. Over the last five years, about 6.5 million homes were lost due to foreclosure. No surprise that figure severely affected the market, right? Well consider this: The Mortgage Bankers Association indicates another 4.3 million more homeowners are seriously delinquent on their mortgages – in short, ripe for foreclosure. We just haven’t gotten to them yet.
Negative Equity Abounds. CoreLogic estimated that as of the end of 2010 more than 11 million homes – over 23% of residential properties with mortgages nationwide – had negative equity. When 1 in 4 homeowners own a house worth less than they paid, the housing market simply can’t function properly. Many people are opting for so-called “strategic defaults” because they are so far underwater the costs appear to be less than the benefits of foreclosure. Others hear of their neighbor’s plight and simply can’t stomach the idea of buying a house now. Such negative perceptions can’t be discounted.
New Home Sales Slump. There were 278,000 new houses sold in February, a paltry number that is near a record low set last August, and one of the lowest figures ever recorded in the data set since it was first recorded back in 1963. Since then sales have “improved” marginally and touched a 323,000 in Commerce Department figures for April. In case you’re curious, three years ago in April 2008 new single-family homes sold at a seasonally adjusted rate of 526,000.