As of March, banks had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier, according to estimates from LPS Applied Analytics. Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier...Based on the rate at which banks have been selling those foreclosed homes over the past few months, all that inventory, real and shadow, would take 103 months to unload. (Here's the article link: LINK)
(click on chart to enlarge)
As home values continue to decline, high unemployment persists and more homeowners resort to strategic default (or "jingle mail"), the number of foreclosures will likely accelerate this year. In addion, Congress does not appear willing to extend the home buyer tax credit program when it expires in 4 days. To make matters worse, 58% of all modified mortgages re-default after just 8 months - a glaring failure of Obama's taxpayer-financed mortgage modification programs.
This in turn will lead to another massive heart attack in the banking system, which no doubt will again be paid for by taxpayers. The moral of this story is that if you are contemplating buying a home, your best move will be to hold off for at least another couple of years to see where this is going. I have said since 2003 that we could see a 75-85% decline in housing prices before a real bottom is hit. I still maintain that view and it would appear that the data may well validate my conviction.
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