If the American housing market is ever to recover -- and provide some momentum to a broader economic turnaround -- it needs to work its way through the millions of foreclosed properties that have yet to be processed and auctioned off. But those cases are taking longer and longer to get through.
In 2007, the average foreclosure process in America, from beginning to end, took 253 days, or about eight months. Today, according to LPS Applied Analytics as reported by CNN, the average foreclosure takes 674 days. That's a year and ten months, almost triple what it was four years ago.
The foreclosure epidemic is one of the main factors inflicting damage on the housing market, which has still not made up for the losses it suffered a few years ago when the real estate bubble burst. In neighborhoods across the country, foreclosed or vacant properties are distorting their local markets, dragging down the values of the surrounding houses and wiping out vast sums in homeowner wealth.
The ubiquity of foreclosures, and their depressing effect on housing prices, has been cited as both a symptom and a cause of the country's persistent unemployment problem. Many homeowners enter default after losing their jobs -- and on the flip side, as the Wall Street Journal recently noted, plummeting home values tend to trap people where they are, making it harder for them to move to other towns where employment opportunities might be more plentiful.
The conundrum is expected to get worse in 2012. New foreclosures climbed by about 21 percent in the third quarter of 2011, with a total of almost 1.33 million foreclosures underway by the end of September. Analysts believe the volume of foreclosures will grow much greater next year as banks begin re-submitting documents that had to be discounted in the wake of the robo-signing scandal, when some of the country's biggest lenders were found to have approved reams of mortgage paperwork without reading it first.
Thanks to a government effort to screen out and correct instances of robo-signing, more than four million homeowners will eventually get the chance to submit their foreclosure cases for review -- an ambitious damage-control program that is nevertheless likely to prolong the real estate market's lifeless condition.
Experts have offered a range of predictions for when the market might touch bottom and housing prices will begin to rise again. Even the most optimistic forecasts don't see a recovery happening until late 2012 or early 2013.