Whatever good news has been released about the housing market recently has not changed the outlook of Ben Bernanke and his worry over an eventual recovery of the sector. Bernanke believes that the breadth of the underwater mortgage problem and overall weakness of the economy could retard any real recovery.
At a speech at the Operation HOPE Global Financial Dignity Summit, the Fed chief said:
To be sure, the housing sector is far from being out of the woods. Construction activity, sales, and prices remain much lower than they were before the crisis. About 20 percent of mortgage borrowers remain underwater–that is, they owe more than their homes are worth. Despite marked improvements in overall credit quality, 7 percent of mortgages are either more than 90 days overdue or in the process of foreclosure. And, although the number of homes in foreclosure has edged down since cresting in 2010, that number remains in excess of 2 million, three times the historical norm. Meanwhile, the national homeownership rate has slipped nearly 4 percentage points from its 2004 high of 69 percent, and it now stands at a 15-year low. So, although there are good reasons to be encouraged by the recent direction of the housing market, we should not be satisfied with the progress we have seen so far.
Douglas A. McIntyre
Filed under: 24/7 Wall St. Wire, Housing