Despite mainstream media reports about a recovery in the housing market, the problem is far from over and is in fact getting worse.
More than 15 million homes are mortgaged for more than their value, according to an August report by real estate research firm First American CoreLogic.Â
If that doesn't seem like an especially large number, consider this; about one in three homes with a mortgage fall into this category.
That means that tens of millions of Americans are now "upside down," with mortgages that exceed the value of their homes.Â
As a result, many have become reluctant landlords, renting homes they cannot afford to sell. Some homeowners are even renting out rooms in their homes to help cover costs.
Since 2007 about 2.5 million homes have been converted into rentals, according to an analysis by Foresight Analytics. This accounts for about 85 percent of the increase in rental homes.
The rate of home ownership hit a record high in 2004 but has since decreased by about two percent, according to Census Bureau data. It's the lowest homeownership rate since 2000.
Home prices nationally are down 31 percent from their 2006 highs, according to the S&P/Case-Shiller Home Price Index.
The problem is a glut of available housing.Â
According to Matthew Anderson, a partner at Foresight Analytics, there was a surplus of five million housing units produced between 2001 and 2008 compared to demand. That resulted in too many homes built for too few people.
At present, there are about 4.4 million empty homes for rent, census figures show. The vacancy rate is among the highest ever recorded, according to census data that goes back to 1956.
According to Anderson's analysis, from 2005 to June 30 of this year, 3.2 million homes were converted into rentals.Â
At the end of 2004, there were about 36.9 million homes either occupied by tenants or empty and available for rent, census figures show. As of June 30, that number increased nearly 11 percent to 40.9 million units. Of that four-million home increase, 3.2 million were conversions into rentals.
The 4.4 million empty homes are creating a glut of rentals, forcing rent prices down, and putting pressure on apartment building owners who now have to compete with single-family homes.
And unless, or until, those homes are sold or rented. they will also continue putting downward pressure on an already depressed national housing market.
It's also worth noting that theÂ number of empty homes doesn't even include REOs, or bank owned properties that have yet to be listed. Banks are holding properties off the market right now in the hope that housing will recover and that they won't be stuck with additional crippling losses.
Sooner or later, the banks are going to be confronted with an ugly reality, and that their best wishes are merely pipe dreams.
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