If and when housing prices dive again don't say Amherst Securities didn't warn you.
Some seven million properties are in trouble and lenders may seize them when mortgage holders default, say Amherst Securities Group analysts, according to a report in Bloomberg news.
"The 'huge shadow inventory,' reflecting mortgages already being foreclosed upon and now delinquent and those likely to be, compares with 1.27 million in 2005," wrote Amherst lead analyst Laurie Goodman in a housing market analysis.
"Assuming no other homes are on the market, it would take 1.35 years to sell properties based on the current pace of existing-home sales," predicted Amherst's gloomy assessment.
Despite the forecast of foreclosures to come, an S&P/Case-Shiller index based on housing prices in 20 metropolitan centers suggested that housing was over the hump.
The index showed "the first month-over-month increases in values since 2006 in May and June," Bloomberg reported.
But those increased prices, according to Amherst, is attributable to a "(seasonal) change in the mix of foreclosure and traditional sales over different parts of the year (that) lifted prices in the period, as the distressed share sank."
Those seasonal factors no longer apply as we enter the fourth quarter.
Adding to the housing problem, the tax credit for first-time buyers will expire by the end of November.
The good news is that the Federal Reserve said it will extend its program to buy mortgage-backed securities to keep a lid on interest rates, although the program eventually will be phased out, said The Wall Street Journal.
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