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Economists, during an annual meeting of the National Association of Real Estate Editors, shared that continuing foreclosures and an "overhang" in housing inventory will likely prolong the housing slump for several more years.  Home values in many markets are still in decline, said Stan Humphries, chief economist for online real estate search and information company Zillow. And housing demand may not see a normal balance with new household formation and housing starts until 2013, said Doug Duncan, chief economist for secondary mortgage giant Fannie Mae.

The "overhang or shadow supply" of housing inventory has a lot to do with the drawn-out recovery for the housing market, he noted.  Zillow also forecasts a bottom in home prices during the third quarter. The "tremendous amount of shadow inventory," which Humphries defined as properties that are in foreclosure and not yet on the market or are seriously delinquent and not yet in foreclosure, is definitely a contributor to the stalled real estate recovery, he said. Negative equity, combined with high unemployment is the other key factor. The federal tax credit programs offered to first-time and existing homebuyers do not appear to have had a major impact in driving sales, he also said Humphries. Also, the tax credits appeared to just be "stealing demand" ahead in time, and July and August are the months to watch out for.

Congratulations to the 1st Quarter 2010 Top Ten & Top Ten Percent Assist-2-Sell offices!

Top Ten Assist-2-Sell Offices 1st Quarter 2010

1. Springfield, MO - Serrano

2. Winter Park, FL - Ashley

3. New Hartford , NY - Hamlin

4. Bath, PA - Sadler

5. Scott Depot, WV - Hazelett

6. Reading, PA - Kubovcsak

7. St. Johns, NL Canada - Stanley

8. (tie) Fort Myers, FL - Potts

8. (tie) Amarillo, TX - Brown

8. (tie) Surrey, BC Canada - Deveau

8. (tie) Saco, ME - Madden

9. (tie) Palmdale, CA - Rosen

9. (tie) Indianapolis, IN - Holly

9. (tie) Alamogordo, NM - Deeds & Mims

10. Ruckersville, VA - McGhee

Top Ten Percent Assist-2-Sell Offices 1st Quarter 2010

• Chattanooga, TN - Everhart & Finnell
• Rapid City, SD – Divan
• Stafford, VA – Vrabel
• Hudsonville, MI – Yntema
• Moncton, NB Canada - Cormier & Hoover
• Deland, FL – Salas
• Juneau, AK – Schick
• Jacksonville, FL – Neighbors
• Dartmouth, NS Canada – Doyle
• Meridian, ID - Budge & Stimpson
• Katy, TX – Johnson
• Marco Island, FL – Iorio
• New Westminster, BC Canada – Longridge
• Atlantic Beach, FL – Lee
• Largo, FL – Fenlon
• Groton, CT – Stebbins
• Loganville, GA – Hyatt
• Largo, FL – Bowman
• Lake Mary, FL – Foutz
• El Paso, TX – Barraza
• Allentown, PA – Sadler
• Tulsa, OK – Henderson
• Onalaska , WI – Johnson
• Waterville, OH - Greive & Hunter

"U.S. house prices will manage a small gain in 2010 after the worst crash since the Great Depression but gains in coming years are likely to come slowly, a Reuters poll found. Home sales and prices may retreat in the near-term after government tax credits to homebuyers as large as $8,000 ended on April 30, economists and property market analysts said.  But that trend will be countered by historically low mortgage rates and the fact that housing affordability is now near the best it has ever been, likely putting prices back on a slow upward path.

Three-quarters of the economists polled May 14-19 said it was possible that average house prices would return to where they were in 2006 before the crash — which would require a rise of more than 40 percent — but that it would take a long time. Home prices as measured by the Standard & Poor's/Case-Shiller 20-city index should rise 1.4 percent this year and 3 percent next year, breaking three years of sharp declines, according to the median forecast.  "The recovery is likely to be longer and more arduous than many expect," said John Silvia, economist at Wells Fargo. The homebuyer credit, which the government expanded and broadened to include repeat as well as first-time buyers, stole many future sales as buyers rushed to lock in deals before the April 30 deadline.

Buyers put away their checkbooks in the first weeks after the credits of $6,500 for repeat buyers and $8,000 for first-time purchasers expired. But there are reasons to be optimistic. Most economists say the recovery now can be sustained without government help and that home prices are fairly valued. But banks still need to put the record supply of repossessed houses on the market, which will keep prices from recovering very quickly. "A toxic combination of weak demand and high supply will generate a double-dip in prices now  that the tax credit has expired," said Paul Dales, U.S. economist at Capital Economics, who expects a 4 percent fall in prices next year."

Mortgage-holding homeowners that owe more than their homes are worth show a greater tendency toward mortgage delinquency behavior, according to a recent Fannie Mae housing survey of more than 3,400 Americans.  While this may not be jaw-dropping news to most of you, the survey points to a changing mindset among homeowners that may be significant.  Although Fannie found that two-thirds of survey respondents prefer owning a home to renting —even in the face of economic challenge and the downturn in housing prices — the mentality of strategic default is spreading.  A contagion effect within communities is leading borrowers to consider default as an acceptable option in the face of financial hardship, Fannie found.

Both delinquent and current mortgage borrowers are more than twice as likely to have seriously considered stopping payment if they know someone who has already defaulted.  Despite a growing acceptance of strategic default on the community level, thinking about walking away and actually walking away are separate events, according to Kathleen Day, a representative at the Center for Responsible Lending.  Slightly more than half (53%) of respondents to Fannie’s survey believe homeowners bear the responsibility for taking out loans they cannot afford. But 58% of delinquent borrowers believe the mortgage lender is to blame, since the lenders “know better what people can afford and should help guide people.”  A separate poll recently found that 24% of mortgage borrowers believe they are underwater.

The new law, AB 183, signed today by Gov. Arnold Schwarzenegger, allocates $200 million to the credit for homes purchased between May 1 and Dec. 31, and between Dec. 31 and August 1, 2011. That's twice the amount allocated to a similar credit passed for purchasers of new homes last year. Those funds were quickly depleted and builders have been asking for the credit's return ever since.

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