FHA Numbers Indicate Foreclosures Will Rise
The report adds to the confusion about the direction that the housing market is heading in 2010. RealtyTrac recently reported that forecloses this year may hit 3 million, up from 2.8 million last year. When the company released December 2009 data on Jan. 13, James J. Saccacio, chief executive officer of RealtyTrac said, "In the long term, a massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond as lenders gradually work their way through the backlog."
Government data showed that home starts fell 4% in December, but building permits rose. The choppy federal data, which can change direction month by month, have been a hard set of indicators to use to forecast the real estate market in terms of sales and home prices.
The housing market will continue to be plagued by unemployment and overleveraged consumers, and pressure will also be on home prices by owners who have underwater mortgages. Some of these mortgage holders may believe that there will never be any equity value in their homes and that they're better off turning their house keys over to the bank.
In addition, a wave of $47 billion in interest-only loans will reset to full payments this year, according to credit agency Fitch Ratings. A portion of these homebuyers won't be able to make their new, higher monthly payments.
The FHA news only adds to the probability that 2010 won't be any better for the housing market than 2009 was.