Housing Of Pain

More and more econ talking heads are coming around to the idea that the housing depression is nowhere near over yet. The latest is Moody's chief Mark Zandi:

The meltdown of the U.S. housing market is not over yet, and home prices will soon start trekking downward again as a flood of foreclosures looms, a well-known economist said Wednesday.

Mark Zandi, chief economist at at Moody's Economy.com in West Chester, Pennsylvania, said in an interview with Reuters home prices will resume their decline by early next year as foreclosure sales pick up again.

"The housing crash is not over," he said.

The U.S. housing market has suffered the worst downturn since the Great Depression, and its impact has rippled through the recession-hit economy as well as the rest of the world. A setback for the hard-hit housing market could portend problems for the U.S. economy.

Home prices, as measured by the Standard & Poor's/Case-Shiller U.S. National Home Price Index, will trough in the third quarter of 2010 after declining 38 percent, Zandi said.

The index peaked in the second quarter of 2006 and hit a trough in the first quarter of 2009, a drop of about 32 percent. Home prices in many regions have been rising.

That is because foreclosure sales fell over the summer and fall as mortgage servicers have tried to put stressed homeowners into the Home Affordable Modification Program and other modification plans, he said.

"This lull in foreclosures sales has resulted in the price gains in the past few months," he said.

"Foreclosure sales will increase, and home prices will resume their decline by early 2010 as mortgage servicers figure out who will not qualify for a modification," he said.

Even the optimists are now saying we're going to see another year of housing prices falling. My money's on declines well into 2011 if not 2012.