No good news, No happy days are here again, No bottom in the housing market.

Leg Two Down

After that little head fake of an uptick in sales for March the RE market is resuming its downward trend. Those that still listen to the screaming heads of CNBC and FAUX news bought into this garbage journalism and unfortunately are going to pay dearly.
The housing crash that began with the subprime collapse in the summer of 2007 is set to resume this summer ... only this time .... higher up the food chain.
Even while the media was touting a bottom in housing as evidence by the uptick in sales, foreclosures were setting new records in March and April.

April was the second straight month with more than 300,000 households receiving a foreclosure filing, as the number of borrowers with mortgage troubles failed to abate.
The April number, however, was less than one percent above that posted in March, when more than 340,000 properties were affected. The March data was up 17 percent from February and 46 percent from a year earlier.
"We've never seen two consecutive months like this," said Rick Sharga, RealtyTrac's senior vice president for marketing. "It's the volume that's surprising."

Really? Realty Trac is surprised? Due to the moratoriums from F&F, FHA and other various banks had set up to quell the tidal wave finally came off, why would they be surprised?

Jumbo's Take Center Stage

The always upbeat NAR had no choice but to concede today that Jumbo's are chumming the water.

In their report titled, “Impact of the Jumbo Mortgage Credit Crunch,” they note that the national share of home sales above $750,000 fell to just 2.3 percent this year from 4.4 percent in 2007.
Meanwhile, the months’ supply of inventory of such homes has risen from 18.7 months to a whopping 41.1 months during the same period.

Almost FOUR years supply of homes in the Jumbo category! With a major credit contraction, overpriced real estate, and a tsunami of foreclosures coming from the ALT-A and ARM's housing prices are about to take another downward spiral.

In ground zero CA, Fitch Ratings reports that ;

Home prices in some hard-hit still have a long way to fall, according to a report released today by Fitch Ratings.
The ratings agency believes California home prices will fall another 36 percent from current levels over the next 12 to 18 months before stabilizing in late 2010.

Mr Mortgage puts it as well as anybody can.

Most assume that because the low end is stabilizing after a 50%+ price drop that the mid-to-upper is also stabilizing. The fact is they are not connected and will bottom independently. The crisis yet to befall the mid-to-upper end will take its participants — the mid-to-upper end earners — through the same painful housing led de-leveraging as their Subprime counterparts.

Cooking the Books

The West will see an aggregate drop in total foreclosure activity but only because in March we saw an artificial spike in Notice of Defaults due to a new law hitting the books July 8th dubbed ‘The CA Foreclosure Prevention Act”. This new law essentially stretches out the foreclosure timeline by adding three months between the NOD and NTS stages.

Foreclosure moratoriums came off just in time for the banks to push through a glut of delinquent properties before the number manipulation can resume. Expect to relive the "Happy Days Are Here Again" tune by the media screaming heads late this summer.

In the month of March, Chase fired up the NOD machine at WaMu servicing for one month only in order to get more borrowers on record ahead of the new CA Foreclosure Prevention Act to be enacted on July 8th. The new law effectively stretches out the CA foreclosure process by 90-days. Borrowers that were not on NOD-record by the end of March could benefit by the new law.

Let me be straight forward. All these efforts, programs, and phony hype will do nothing to prevent the inevitable. Housing prices skyrocketed far beyond salaries. $700K starter homes were fantasyland for borrowers and an orgy for lenders.
RE prices have to come down substantially. The government response only delays this process of correction.