Zandi: The Housing Crash Is Not Over

Mark Zandi, chief economist at at Moody's Economy.com has really cranked out the numbers on the housing market.

His final conclusion: "The housing crash is not over."  In fact, he thinks it is far, far from over and that the majority of foreclosures are still to come, putting enormous pressure on housing prices.

Here's a reacp from Marketwatch on the market and Zandi's comments:

The U.S. housing market has suffered the worst downturn since the Great Depression, and its impact has rippled through the recession-hit economy as well as the rest of the world. A setback for the hard-hit housing market could portend problems for the U.S. economy.

Home prices, as measured by the Standard & Poor's/Case-Shiller U.S. National Home Price Index, will trough in the third quarter of 2010 after declining 38 percent, Zandi said.

The index peaked in the second quarter of 2006 and hit a trough in the first quarter of 2009, a drop of about 32 percent. Home prices in many regions have been rising.

That is because foreclosure sales fell over the summer and fall as mortgage servicers have tried to put stressed homeowners into the Home Affordable Modification Program and other modification plans, he said.

"This lull in foreclosures sales has resulted in the price gains in the past few months," he said.

"Foreclosure sales will increase, and home prices will resume their decline by early 2010 as mortgage servicers figure out who will not qualify for a modification," he said.

Zandi said 7.5 million foreclosure sales will have taken place between 2006 and 2011. The majority of these sales, however, have not emerged yet, with 4.8 million foreclosure sales expected between 2009 and 2011.

Zandi said another significant obstacle to a housing market recovery is the number of mortgages that are "underwater," where borrowers owe more for the loan than the residence is worth.

This negative equity disqualifies many homeowners from refinancing and prevents some from selling their homes.

Borrowers in negative equity are also more prone to defaults and foreclosures. Zandi said about 25 percent of single-family homes with mortgages have negative equity.

"With so many homeowners so deeply underwater and unemployment very high and on the rise, the foreclosure crisis will continue putting more pressure on home prices," he said.