Every 13 seconds in America, there is another foreclosure filing. That’s the rhythm of a crisis that threatens to choke off hopes for a recovery in the U.S. housing market as it destroys hundreds of billions of dollars in property values a year.
There are more than 6,600 home foreclosure filings per day, according to the Center for Responsible Lending, a nonpartisan watchdog group based in Durham, North Carolina. With nearly two million already this year, the flood of foreclosures shows no sign of abating any time soon.
If anything, the country’s worst housing downturn since record-keeping began in the late 19th century may only get worse since foreclosures, which started with subprime borrowers, have now moved on to the much bigger prime loan market on the back of mounting unemployment.
In congressional testimony last month Michael Barr, the Treasury Department’s assistant secretary for financial institutions, said more than 6 million families could face foreclosure over the next three years.
The Center for Responsible Lending says foreclosures are on track to wipe out $502 billion in property values this year.
That spillover effect from foreclosures is one reason why Celia Chen of Moody’s Economy.com says nationwide home prices won’t regain the peak levels they reached in 2006 until 2020.
In states hardest-hit by the housing bust, like Florida and California, the rebound will take until 2030, Chen predicted.
“The default rates, the delinquency rates, are still rising,” Chen told Reuters. “Rising joblessness combined with a large degree of negative equity are going to cause foreclosures to increase,” she added.
Anyone doubting that the recovery in U.S. real estate prices will be long and hard should take a look at Japan, Chen said.
Prices there are still off about 50 percent from the peak they hit 15 years ago.