Foreclosures hit a 29 Year High/ 2 year Credit Recession on the way?

A quick update today everyone. Well we have now officially moved past the 1990 housing bust in terms of foreclosures. Its back to the 1970's for comparable housing numbers!

Here is the data from Bloomberg:

"June 5 (Bloomberg) -- The number of Americans in danger of losing their homes to foreclosure rose to the highest in almost three decades during the first quarter as borrowers who fell behind on payments were unable to sell their homes.

New foreclosures rose to a seasonally adjusted 0.99 percent of all U.S. home loans, up from 0.83 percent in the fourth quarter, the Mortgage Bankers Association said in a report today. The total inventory of homes in foreclosure increased to 2.47 percent and the delinquency rate, loans with one or more payments overdue, grew to 6.35 percent. All were the highest since 1979, the Washington-based trade group said."

Quick Take:

The housing news continues to worsen. I am amazed at how we literally get bad housing news everyday! I expect foreclosures at its peak to set all time records. This ball just got rollin folks.


2 Year Credit Recession on the way?

This is the prediction reported by Reuters yesterday. Here are the highlights:

"NEW YORK (Reuters) - A "credit recession" sparked by the U.S. housing market downturn and excesses in structured finance may last more than two years, and the financial sector will undergo "massive consolidation," leading Wall Street strategists said on Wednesday.

The fallout from deteriorating subprime mortgages and the broader housing and credit crisis will eventually lead to a healthier market, but not until after a prolonged purging process, Jack Malvey, Lehman Brothers Holdings Inc's (LEH.N: Quote, Profile, Research) chief global fixed-income strategist, said in New York.

"We're going through a tough spell with regard to credit," Malvey said at a Securities Industry and Financial Markets Association conference.

The "subprime debacle" due to years of excess and easy credit will be followed by years of tight credit, Malvey said."

Quick Take:

The easy money credit days are coming to an end. This will be quite a financial hangover that we have to recover from.

The banks will be hit with regulation as the fallout from this subprime debacle needs to be cleaned up. I hope that something like this never happens again. but history has shown that it usually will. I hope its not in my lifetime. This is going to take several years everybody.

A two year recession to wring out the credit losses is well within reason. Anyone that is taking their home off the market thinking they can sell it at 2005 prices in a couple years is insane. There will be no quick turn around. These home sellers would be much better off dropping the price until they find buyers right now.

Lending is only going to get tighter going forward and you could find yourself in a worse housing market a couple of years from now.

Stocks are up today. We have been down everyday this week so we were due for a bounce. The big unemployment number is out tomorrow. Expect some major price action if we get a surprise.

The street will be pretty quit today anxiously waiting for tomorrows jobs number.