Home Prices Rose Most in Two Decades in March, FHFA Says

U.S. home prices jumped 1.8 percent in March, the biggest monthly increase in at least two decades, as the housing recovery builds momentum, the Federal Housing Finance Agency said today.

The rise from February exceeded all analysts’ estimates, which ranged from a decline of 0.2 percent to a gain of 0.7 percent. Compared with a year earlier, prices surged 2.7 percent, the FHFA said in a statement.

Record-low mortgage rates, job gains and a dwindling inventory of properties available for sale have combined to strengthen demand for homes. Purchases of previously owned U.S. houses climbed 3.4 percent in April to a 4.62 million annual rate, the first increase in three months, the National Association of Realtors said yesterday.

“Increased affordability and a somewhat smaller inventory of homes for sale are positively impacting house prices,” Andrew Leventis, principal economist with the FHFA in Washington, said in the statement.

The FHFA report measures changes in real estate values using purchases of properties with mortgages backed by Fannie Mae (FNMA) or Freddie Mac. (FMCC) It doesn’t provide a specific price for homes. The monthly increase was the largest in records going back to 1991, according to data compiled by Bloomberg. The average estimate of 18 economists surveyed by Bloomberg was for a 0.3 percent monthly gain.
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“Prices are hitting a bottom,” Patrick Newport, an economist for IHS Global Insight in Lexington, Massachusetts, said yesterday in a telephone interview. “It’s good news because it means that consumer wealth that comes from a home is no longer dropping.”

Sales of Existing Homes in U.S. Rise as Market Stabilizes

Sales of existing U.S. homes rose in April, driven by broad-based gains in demand that signal the market is stabilizing.

Purchases, tabulated when a contract closes, increased 3.4 percent to a 4.62 million annual rate, figures from the National Association of Realtors showed today in Washington. The median price jumped by the most in six years.
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“We are making incremental progress,” said Millan Mulraine, a senior U.S. strategist at TD Securities Inc. in New York, who correctly forecast the sales pace. “People are becoming more confident about job prospects and about taking on mortgages. This is all positive for the economy.”
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The April sales pace was in line with the 4.61 million median forecast in a Bloomberg News survey. Estimates of the 73 economists ranged from 4.47 million to 4.8 million. The prior month’s pace was revised to 4.47 million, from a previously reported 4.48 million. April’s total was just shy of the 4.63 million reached in January that was the highest in almost two years.
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The median price of an existing home climbed 10 percent to $177,400 from $161,100 in April 2011, today’s report showed. It was the biggest year-to-year gain since January 2006 and reflected a seasonal mix in demand toward bigger houses and fewer distressed sales, Yun said.

Families return to the market at this time before the start of a new school year, pushing up demand, he said. Cash transactions, distressed properties and investors accounted for a smaller share of all purchases last month, he said.

Purchases improved in all four regions, led by a 5.1 percent gain in the Northeast.

From CNBC:

Huge Spike in Home Prices Is Not Real

The median price of an existing home that sold in April of this year was $177,400, an increase of just over ten percent from a year ago. That is the biggest price jump since January of 2006. The difference between now and then, though, is the 2006 price jump was real, this latest spike is not.
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The share of home sales in the $0-250,000 price range made up over 73 percent of all sales in February; that has already dropped to 67 percent in April.

If you look at sales by price category, you see the most startling evidence of this shift in what’s selling on the low end out west. Sales of homes $0-100,000 dropped over 26 percent out west in April, but rose 21 percent in the $250-500,000 price range. The national numbers tell the same story.
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So what does this say about where we really are in terms of home prices nationally? The Realtors still expect overall home prices to rise just 2-3 percent in 2012, which is one of the more bullish predictions. If the banks start releasing more properties onto the market or push more delinquent loans to foreclosure, overall home prices will come down again.

From Bloomberg:

L.A. Appraiser Accused of Cutting Home Values $172 Million

A former Los Angeles appraiser was charged with lowering the property values of wealthy home and business owners by $172 million in return for campaign contributions to County Assessor John Noguez.

Scott Schenter, 49, was arrested today in Beaverton, Oregon, and is being held on $1.5 million bail, Los Angeles County District Attorney Steve Cooley said in a statement. The arrest is part of an investigation into allegations that Noguez cut property values of wealthy clients of a tax consultant and campaign contributor, Cooley said.

“The magnitude of Schenter’s suspected betrayal of public trust is almost inconceivable,” Cooley said. “We believe his actions are not isolated.”

Schenter, who was an appraiser from 1988 to early last year, is accused of lowering the values of multimillion-dollar homes and businesses in Beverly Hills, Brentwood and Pacific Palisades. The unauthorized reductions were discovered by a supervisor in January of last year, according to the prosecutor.

The former appraiser faces 30 counts of falsifying accounts and 30 counts of falsifying records. If convicted, he faces as long as 33 years in state prison, Cooley said.

Look Who’s Pushing Homeowners Off the Foreclosure Cliff

One of the more confounding aspects of the U.S. housing crisis has been the reluctance of lenders to do more to assist troubled borrowers. After all, when homes go into foreclosure, banks lose money.

Now it turns out some lenders haven’t merely been unhelpful; their actions have pushed some borrowers over the foreclosure cliff. Lenders have been imposing exorbitant insurance policies on homeowners whose regular coverage lapses or is deemed insufficient. The policies, standard homeowner’s insurance or extra coverage for wind damage, say, for Florida residents, typically cost five to 10 times what owners were previously paying, tipping many into foreclosure.

The situation has caught the attention of state regulators and the Consumer Financial Protection Bureau, which is considering rules to help homeowners avoid unwarranted “force- placed insurance.” The U.S. ought to go further and limit commissions, fine any company that knowingly overcharges a homeowner and require banks to seek competitive bids for force- placed insurance policies. Because insurance is not regulated at the federal level, states also need to play a stronger role in bringing down rates.

All mortgages require homeowners to maintain insurance on their property. Most mortgages also allow the lender to purchase insurance for the home and “force-place” it if a policy lapses or is deemed insufficient. These standard provisions are meant to protect the lender’s collateral — the property — if a calamity occurs.
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Here’s how it generally works: Banks and their mortgage servicers strike arrangements — often exclusive — with insurance companies in which the banks agree to buy high-priced policies on behalf of homeowners whose coverage has lapsed. The bank advances the premium to the insurer, and the insurer pays the bank a commission, which is priced into the premium. (Insurers say the commissions compensate banks for expenses like “advancing premiums, billing and collections.”) The homeowner is then billed for the premium, commissions and all.

It’s a lucrative business. Premiums on force-placed insurance exceeded $5.5 billion in 2010, according to the Center for Economic Justice, a group that advocates on behalf of low- income consumers. An investigation by Benjamin Lawsky, who heads New York State’s Department of Financial Services, has found nearly 15 percent of the premiums flow back to the banks.

It doesn’t end there. Lenders often get an additional cut of the profits by reinsuring the force-placed policy through the bank’s insurance subsidiary. That puts the lender in the conflicted position of requiring insurance to protect its collateral but with a financial incentive to never pay out a claim.

America’s 10 Richest Counties

10. Westchester County, N.Y.
Average income: $128,127
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9. Morris County, N.J.
Average income: $128,371

Morris County, located about 25 miles from New York City, is another county within easy commuting distance to Manhattan. It includes Harding Township once named one of the richest zip codes in the U.S. by Forbes.

Morris County has numerous Revolutionary war-era historic sites, such as Washington’s Headquarters and Jockey Hollow, where the Continental army endured the brutal winter of 1779-80. The county’s unemployment rate for 2011 was 7.3, nearly 3 points lower than the state average of 10 percent according to the N.J. Department of Labor and Workforce Development.
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8. Marin County, Calif.
Average income: $128,544
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7. Somerset County, N.J.
Average income: $129,222

Somerset County is another wealthy location in the New York metropolitan area. Area companies include Johnson & Johnson, Verizon, Pfizer and UPS. Somerset includes the picturesque hilly town of Bernardsville, location of the former estates of Jackie Onassis, Mike Tyson and Malcolm Forbes.
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6. Fairfield County, Conn.
Average income: $130,074
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5. Hunterdon County, N.J.
Average income: $130,723

Hunterdon County is located in the northwestern part of New Jersey between this list’s No. 9 county, Morris, to the northeast, and No. 7, Somerset County, to the east. It’s more rural than its Central Jersey neighbors and is a destination for fishing and hunting white tail deer. In Hunterdon, commuters are split between New York City and Philadelphia.
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4. Fairfax County, Va.
Average income: $132,662
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3. Loudoun County, Va.
Average income: $134,098
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2. Pitkin County, Colo.
Average income: $134,267
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1. Nantucket County, Mass.
Average income: $137,811

Housing Ends Slide but Faces a Long Bottom

Nearly six years after home prices started falling, more U.S. housing markets appear to be nearing a new phase: a prolonged bottom.

Hitting a bottom, of course, isn’t the same as a full-fledged recovery, which is still years off for many housing markets—as well as for millions of people who purchased homes or took cash out during the bubble.

The good news is that housing construction and home sales appear to have hit a floor. Home builders cut back heavily in the past four years and began construction on just 434,000 single-family homes last year, the lowest level on record. Research firm Zelman & Associates estimates builders will start construction on 540,000 homes this year, a 24% increase.
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Sales of previously owned homes, meanwhile, are up 32% from their low point of mid-2010, when sales plunged following the expiration of home-buyer tax credits.

That leaves prices as the last measure that hasn’t yet stopped falling. But there are signs of progress on that front, too, as the pace of declines is slowing.

In February, home prices fell by 2% from their level of a year earlier, according to CoreLogic Inc., a real-estate-data firm. But after excluding foreclosures and other distressed sales, prices were down by just 0.8%, the smallest year-over-year decline since May 2010.

“If you remove the distress, you’re looking at housing prices not falling much further,” said Jonathan Miller, president of Miller Samuel Inc., a New York-based appraisal firm.

The problem, of course, is that foreclosures are still a very high share of sales in many of the hardest-hit markets.
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Housing economists are debating whether that shadow inventory will spoil any housing recovery. “That’ll be like a ball and chain,” said Mark Fleming, chief economist at CoreLogic. “It won’t prevent a recovery, but it could drag it out over several years.”
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Ms. Zelman, who was among the first to warn that the air had begun seeping out of the housing bubble six years ago, said the shadow inventory is “not going to result in the double dip that people always talk about.” She points to a burgeoning appetite for housing from investors, who are scooping up homes that can be converted to rentals, and six years of pent-up demand from traditional buyers who feel better about their financial prospects. “The fear is gone,” she said.
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Ms. Zelman, who was among the first to warn that the air had begun seeping out of the housing bubble six years ago, said the shadow inventory is “not going to result in the double dip that people always talk about.” She points to a burgeoning appetite for housing from investors, who are scooping up homes that can be converted to rentals, and six years of pent-up demand from traditional buyers who feel better about their financial prospects. “The fear is gone,” she said.

Pending Sales of U.S. Existing Homes Increased 4.1% in March

Signed contracts to buy U.S. homes rose more than forecast in March as low interest rates drew buyers back into the market.

The index of pending home purchases rose 4.1 percent to 101.4, the highest level since April 2010, after a 0.4 percent gain in February that was revised from a previously estimated 0.5 percent drop, the National Association of Realtors reported today in Washington. The median forecast of 43 economists surveyed by Bloomberg News called for a 1 percent rise in the measure, which tracks contracts on previously owned homes.
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“It’s good news,” said Sean Incremona, senior economist at 4Cast Inc. in New York. “It does suggest that improvement in the housing market is continuing.”
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Compared with a year earlier, March pending home sales climbed 10.8 percent after a 14.9 percent surge in February.

From Reuters:

Pending homes sales near two-year high in March

Contracts to purchase previously owned homes increased solidly to a near two-year high in March, suggesting the spring selling season got off to a firmer start and offering hopes of a pickup in housing.

The National Association of Realtors said on Thursday its Pending Home Sales Index, based on contracts signed in March, jumped 4.1 percent to 101.4, the highest level since April 2010.

Economists polled by Reuters had expected signed contracts, which lead existing home sales by a month or two, to rise 1.0 percent after a previously reported 0.5 percent fall.

March’s strong rise in signed contracts pointed to a pick up in home resales after they stumbled in the past two months.
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Signed contracts were up 12.8 percent in the 12 months to March.

US home prices drop for 6th straight month

Home prices dropped in February in most major U.S. cities for a sixth straight month, a sign that modest sales gains haven’t been enough to boost prices.

The Standard & Poor’s/Case-Shiller home-price index shows that prices dropped in February from January in 16 of the 20 cities it tracks.

The steepest declines were in Atlanta, Chicago and Cleveland. Prices rose in Phoenix, San Diego and Miami. They were unchanged in Dallas.

The declines partly reflect typical offseason sales. The month-to-month prices aren’t adjusted for seasonal factors.

Still, prices fell in 15 of the 20 cities in February compared with the same month in 2011. That indicates that the housing market remains far from healthy despite the best winter for sales in five years.

The steady price declines have brought the nationwide index to its late 2002 level. Home prices have fallen 35 percent since the housing bust.
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Stan Humphries, chief economist for housing website Zillow.com, attributed the declines in part to heavy sales of foreclosed homes, which are usually sold at super-low prices. Foreclosures made up about one-fifth of February’s sales.

“We think home sales will continue to trend upward, which ultimately will result in a slower rate of home value depreciation,” Humphries said. “But any housing recovery will be dependent on job growth.”

Short Sales Higher, Prices Lower

Buyer traffic is strong, supply of homes for sale is low, and yet home prices continue to defy the usual formula, falling again in March. Prices usually rise as supply shrinks, but demand is still too low to make those historical “norms” compute, not to mention that the type of supply available is largely distressed.

Foreclosures and short sales (when the home is sold for less than the value of the mortgage) accounted for 47.7 percent of sales, in a three month running average measured by Campbell/Inside Mortgage Finance. That’s the 25th month in a row that distressed sales have topped 40 percent of the market.

“With nearly half of the market being distressed, we’re a long way from a return to a normal market,” said Thomas Popik, research director at Campbell Surveys. “Agents responding to our survey say that homeowners with well-maintained properties in good locations are very reluctant to list at today’s prices. That’s why inventory is low—and also why forced REO and short sales are such a big proportion of the remaining market.”

Home prices for non-distressed properties fell 5.7 percent in March year-over-year, according to the survey. Prices for “damaged” REO (bank-owned properties) fell 5.7 percent and for move-in ready REO fell 2.5 percent during the same period. The real sticker shock is in short sales. Prices of those homes fell 14.3 percent from March of 2011.
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That share is likely to grow, as the conservator of Fannie Mae and Freddie Mac, the Federal Housing Finance Agency (FHFA), last week announced it was directing the two mortgage giants to “develop enhanced and aligned strategies for facilitating short sales, deeds-in-lieu and deeds-for-lease in order to help more homeowners avoid foreclosure.” It includes a requirement that mortgage servicers review and respond to short sale requests within thirty days.
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“This could put short-term downward pressure on home prices, as short sales by their nature occur more quickly than foreclosures,” writes Jaret Seiberg, analyst at Guggenheim Partners. “That could raise questions about the status of the housing recovery, which could be negative for those with housing exposure. That would include homebuilders, mortgage lenders and mortgage insurers.”

On the plus side, short sales tend to sell at higher prices than foreclosures. It appear, however, that regardless of the FHFA edict, banks are already ramping up the short sales. Some began doing so in the aftermath of the robo-signing scandal, as foreclosures stalled. Even now, foreclosures falling as short sales rise. The good news is that sales of distressed properties are rising, but the headlines will likely focus more on the falling prices, than the much-needed clearing of these homes.

U.S. Existing-Home Sales Probably Rose

Sales of previously owned U.S. homes probably increased in March as a drop in mortgage rates propelled demand to its strongest quarter in almost two years.

Purchases climbed 0.7 percent to a 4.62 million annual rate from 4.59 million in February, according to the median estimate of 72 economists in a Bloomberg News survey. Sales in the first three months of the year would average 4.61 million at an annual pace, the best since April through June 2010. Jobless claims declined last week, other data may show.

An improved labor market, mortgage rates near historic lows and cheaper properties are shoring up an industry that’s been the economy’s soft spot. At the same time, further progress in residential real estate is being challenged by distressed properties and the threat of more foreclosures.

“Better jobs, better income, better affordability and lower mortgage rates mean you will sell more homes,” said Stuart Hoffman, chief economist of PNC Financial Services Group in Pittsburgh.

The National Association of Realtors’ data are due at 10 a.m. in Washington. Economists’ estimates range from 4.5 million to 4.75 million.

Existing-home sales, tabulated when a contract closes, climbed to 4.26 million last year, from 4.19 million in 2010. Demand peaked at 7.1 million in 2005 during the housing boom. In 2008, sales totaled 4.1 million, the least since 1995.

Home prices close to bottoming, to rise in 2013

The relentless decline in home prices is nearing an end and prices should rise for the first time in seven years in 2013, but a possible new wave of foreclosures could threaten the recovery, according a Reuters poll of economists.

The median forecast of 24 economists polled by Reuters was for the S&P/Case-Shiller 20-city home price index to end the year unchanged. That was the same finding back in January for this house price gauge, which covers 20 cities.

“We are expecting a gradual improvement, but if we get a big wave of new foreclosures coming to the market, price declines could be even greater,” said Yelena Shulyatyeva, an economist at BNP Paribas in New York.

The survey forecast the S&P/Case-Shiller home price index rising 2.0 percent next year, up from 1.5 percent in the January survey.

The housing market’s collapse pushed the economy into its longest and deepest recession since the 1930s. Historically, housing has led the economy out of recession, but it has been the weakest link in the recovery that started in mid-2009.
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“The problem with the housing market is not necessarily that mortgages are expensive,” said Millan Mulraine, a senior macro Strategist at TD Securities in New York.

“It’s more the expectation that prices may continue to fall and cause a lot of potential buyers to sit on the sidelines to wait for more attractive entry points. I don’t think there is lot more mileage to be achieved from MBS purchases.”
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“This gradual healing is encouraging, but we must tread carefully as the housing market is still far from a robust recovery,” Michelle Meyer, an economist at Bank of America Merrill Lynch in New York.

The rebound is now

On fundamentals, America’s housing market looks increasingly healthy. Inventory levels and vacancy rates are way down and rents are up. At the national level, the entirety of the price boom between 2000 and 2006 has been unwound and then some. Mortgage markets are still clogged, but investors are moving properties from owner-occupied to rental status with gusto. And yet, as the quote above indicates, prices are still dropping. What gives?

One major issue is the serious limitations of housing market data. Take the Case-Shiller index. Its monthly figures are a three-month moving average, which means that the January numbers are an average of prices reported in November, December, and January. And Case-Shiller gets its data when closed sales are officially reported, which means that the figures could include sales the contracts for which were signed as far back as September. It’s now closer to September of 2012 than to September of 2011!

There’s a glaring data hole, in other words, and Jed Kolko, chief economist at Trulia, is endeavouring to fix it. Today, he unveiled a new price and rent monitor built on listings at Trulia.com. Mr Kolko writes that final asking prices are a good predictor of sales prices—but are available months before the closing sale price. By taking asking prices and rents and adjusting them for property characteristics, he reckons he can put together a useful indicator of home prices with a much shorter turnaround time. And what does the inaugural monitor say about housing-market conditions?

Nationally, asking prices on for-sale homes were 1.4% higher in March than one quarter ago. Prices increased month over month by 0.9% in March and 0.6% in February. What we found through the Monitor is that asking prices had been declining prior to February and reached a low in January 2012. Throughout 2011, asking prices rose slightly in several months of the year, but never more than 0.2% in a month. Asking prices in March were 0.7% below their level one year earlier.

One thing to keep in mind — because the Trulia Price Monitor is seasonally adjusted, these monthly and quarterly increases are on top of typical springtime price jumps. Without adjusting for seasonality, asking prices rose 2.4% quarter over quarter.

Americans brace for next foreclosure wave

Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end. House sales are picking up across most of the country, the plunge in prices is slowing and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low.

But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.
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Housing experts say localized warning signs of a new wave of foreclosure are likely to be replicated across much of the United States.

Online foreclosure marketplace RealtyTrac estimated that while foreclosures dropped slightly nationwide in February from January and from February 2011, they rose in 21 states and jumped sharply in cities like Tampa (64 percent), Chicago (43 percent) and Miami (53 percent).

RealtyTrac CEO Brandon Moore said the “numbers point to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed.”
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Zillow expects the resurgence in foreclosures this year, combined with excess inventory of unsold, bank-owned homes will contribute to a 3.7 percent national decline in prices before the market hits bottom in 2013 and stays there until 2016.

“The hangover from this crisis will far outlast the party of the boom years,” said Zillow chief economist Stan Humphries.

Getting through the remaining foreclosures and dealing with the resulting flood of homes on the market in the wake of the bank settlement is a necessary part of the healing process for the U.S. housing market, he added.

According to leading broker dealer Amherst Securities, some 9.5 million homes are still at risk of default and in February it said it expected to see the uptick in foreclosures start to hit in March and April.

As Home Rents Head Higher, Owning Regains Its Appeal

Climbing rents for apartments are combining with a continued decline in home prices to push once-reluctant home buyers into finally taking the plunge, say economists and real-estate agents, helping what appears to be a good start to the housing industry’s all-important spring selling season.

Although increased buying activity from investors and second-home purchasers are also factors behind the recent pickup in home sales, real-estate agents say they are fielding more calls from anxious tenants complaining about rising rents.

“The rental market has been incredibly hot,” said Ronald Peltier, chief executive of HomeServices of America Inc., which owns real-estate brokerages in 21 states. He says rising rents, coupled with slumping home prices and interest rates near record lows, are boosting demand for homes at entry-level prices.

Average apartment rents rose by 2.7% last year while the national vacancy rate dropped below 5% for the first time since 2001, according to a quarterly survey to be released Wednesday by Reis Inc., REIS a real-estate research firm.
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Such increases are one reason why analysts at Zelman & Associates believe 2012 will be the first year since 2005 when the share of apartment renters that moves out to buy a house increases from the previous year. “The equation of renting versus owning is becoming much more favorable for owning,” said Ivy Zelman, the firm’s chief executive.
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Nishu Sood, a housing analyst with Deutsche Bank DBK.XE who tracks housing costs, says that, historically, the cost to rent an apartment has been about 10% lower than the after-tax cost of owning a home. That rental discount began to fall in 2010 and disappeared entirely last year. By the end of 2011, Mr. Sood’s research found that the cost to rent an apartment was about 15% higher than the cost to own a home. Conditions are “overwhelming in the favor of buying now. It is unequivocal,” he said.
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And for some renters, the housing crisis has shaken their desire to become owners. “If I was going to buy, I feel like I would be just in the same problem that other homeowners are having with the market,” said Laurel Slutsky, 24, who just renewed the one-year lease on her Chicago two-bedroom.

“Right now, all my friends and I are hopping around neighborhoods, and I don’t see the benefit in buying and staying in one place.”

Real Estate Recovery a Tale of Good, Bad and Ugly

In Miami, condominiums are hot again.

In Phoenix, builders are opening new communities.

In New Jersey, buyers are finding it takes about three years to foreclose on a property

In Atlanta, home prices are down 14 percent annually, thanks to a new wave of foreclosures.

In California, more than half of all home sales in February involved distressed properties, but sales were up 5 percent month-to-month.

In Northern Virginia, a half million dollar home just sold in less than a week.

The housing recovery is under way in fits and starts, but it is volatile, and it is local.
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Home prices nationally are down around 4 percent from a year ago, according to the latest report from S&P/Case-Shiller. While price declines are decelerating, that’s a new low for the index, which is now down 34.4 percent from its peak in 2006.

“Our view is that foreclosures, excess supply, and weak demand will drive home prices as measured by the Case-Shiller indices down at least another 5 percent,” says Patrick Newport of IHS Global Insight.

Newport points to the following negatives: 12 percent of homeowners with mortgages (i.e., more than 6 million homeowners) were either delinquent on their payments or in foreclosure at the end of the fourth quarter, according to the Mortgage Bankers Association; 22 percent of residential properties with mortgages are currently underwater, according to CoreLogic.
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While the employment picture is improving, unemployment and underemployment are still running high, and mortgage rates, which hit historical lows just a few months ago, are on the rise again.

None of this points to a speedy recovery.
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With more regulation ahead for the mortgage market, an uncertain future for Fannie Mae and Freddie Mac, and 11 million Americans owing more on their mortgages than their homes are worth, housing will not spring back to life, no matter what the season.

Instead, it will likely sputter for a while, surge, retreat and repeat the cycle, until most of the distressed inventory is sold and home prices finally find a bottom.