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U.S. House Prices Analysis and Trend Forecast 2019 to 2021

U.S. Housing Market Mortgage Meltdown Wave Two

Housing-Market / US Housing Nov 20, 2009 - 11:32 AM GMT

By: Mac_Slavo

Housing-Market

Best Financial Markets Analysis ArticleIn Mortgage Delinquencies Up 58% we pointed out that the American home owner borrower will continue to experience difficulty in making their monthly payments for years to come.


The following chart from Agora Financial demonstrates the detonation of the mortgage market thus far, where we are today, and what we can expect in the very near future.

A BIG thank you to Patrick for pulling the research on this and providing it for all to review.

Based on this information, it looks like the next wave may be as powerful, if not more powerful, than the first. In the first wave, we saw the sub-prime meltdown, meaning that mortgages for borrowers with lower credit worthiness exploded, leaving us in the situation where we find ourselves today.

This next round is going to include prime borrowers, more sub-prime borrowers, and Alt-A borrowers who were able to buy homes with little or no income verification, and in many cases, nothing down. It’s possible, and likely, that the value of many of the loans that will come under threat will have higher loan balances than even sub-prime (More on Alt-A’s here). Finally, we’ll be seeing Option-ARM’s blowup for those whose rates reset, significantly raising their monthly payments.

For an American middle class that has been financially devastated by job losses, wage decreases and credit contraction, we don’t see recovery any time soon.

According to the chart above, we should start seeing detonations around the country some time in April or May of 2010 with the fallout clearing up some time in late 2012.

Some estimates have forecasted that real estate is set to decline another 10% to 15%. But, what if the next wave collapses our real estate market another 30%, or even 50%? Doesn’t sound possible does it? For non-believers, we direct your attention to the Japanese real estate bubble of the 1990’s compared to the USA through 2008.

By Mac Slavo

http://www.shtfplan.com/

Mac Slavo is a small business owner and independent investor focusing on global strategies to protect, preserve and increase wealth during times of economic distress and uncertainty. To read our commentary, news reports and strategies, please visit www.SHTFplan.com

© 2009 Copyright Mac Slavo - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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