According to a recent Bloomberg article, more than 28 percent of U.S. homeowners owed more than their properties were worth. This is in the first quarter of 2011. This was the biggest drop in U.S. home values since 2008. Home prices fell approximately 3% in the first quarter of 2011. And, they are expected to fall as much as 12% before the year is over. The unemployment epidemic and ever-increasing foreclosure inventory seem to be the leading factors in the sinking housing market.
The U.S. unemployment rate rose to 9% in April, up from 8.8% in March. While foreclosures fell to the lowest level in three years in the first quarter as lenders worked through a backlog of flawed paperwork, filings are likely to jump 20 percent this year; reaching a peak for the housing crisis.
In my opinion, until the inventory of loans originated in the 2005 - 2007 apex are resolved (either through a deed in lieu transfers, mortgage modifications, foreclosures, or short sales) the sinking housing market will continue. Recovery will require efforts and sacrifices on the part of the banks. Also, the courts, the legislature, and on we the people. In other words, everyone that enjoyed the wild party during the boom years is going to have to help clean up the mess.