Even when home prices stop sliding in much of the country, or sales by distressed borrowers level off, there’s a whole other wave of pent-up sellers waiting on the sidelines.
“You’ve had a lot of people who’ve held homes off the market because they don’t want to compete with foreclosures. It’s likely to be a buyer’s market for awhile, mainly because there are so many homes on the market and there is still a limited supply of qualified buyers,” Vitner said. “The supply of buyers is being limited by high unemployment and the large number of people with homes they can’t sell.”
Here’s one grim indication of where housing stands. Before the housing bubble burst, residential investment accounted for about 6.3 percent of the nation’s economic activity. Today, that number has fallen to around 2.4 percent, according to Michael Mussa, a former World Bank chief economist now with the Peterson Institute for International Economics, a research group.