In an interview with Real Vision [1], real estate analyst Keith Jurow stated that recent housing market recovery has been nothing more than an illusion. According to Jurow, the “illusion” stems from lenders and mortgage services not putting foreclosed properties on the market.
“This had nothing to do with any kind of economic recovery,” Jurow said. “The house market turnaround was because of the actions taken by the lenders and servicers.”
Jurow notes that there are four factors putting the U.S. housing market at risk: subprime mortgages, defaulting on modified mortgages, declining home sales in the hottest market. There are currently $800 billion of subprime mortgages still outstanding, many of which have not been paid at all in the last five years.
Additionally, millions of owners of modified mortgages started redefaulting almost immediately after they were modified. “Some of them have redefaulted two or three times,” Jurow said. “A second redefault is greater. So this problem is getting worse as we move forward.”
“There are very dangerous circumstances today that you have to think about, in terms of making decisions concerning houses,” Jurow concluded. “There is no way I would consider buying a house either to live in or as an investment with all of these circumstances and risks. And if I were a homeowner, I would seriously consider selling before things get much worse.”