Barclays: Foreclosures Could Harm Local Housing Recovery

Recovery in the economy as a whole appears likely to continue in the second half of this year but parts of the U.S. housing market may remain bogged by roughly 4 million foreclosed or seriously delinquent properties concentrated in certain states, Barclays researchers said as part of a global outlook press briefing in New York. About 1.9 million out homes in the United States are in foreclosure and roughly another 1.9 million are owned by borrowers 90 or more days delinquent on their mortgages, said Ajay Rajadhyaksha, head of U.S. fixed income and securitized products strategy at Barclays. Because these home are concentrated in certain states, this leads to what he calls a housing market in "two parts," in which home prices in some areas such as Texas and Washington state might stabilize in the second half. But in states like California, Florida, Nevada and Michigan prices are likely to continue to be weighed down by foreclosures and subperforming mortgage concerns. In Michigan, about 82 out of every 100 existing home sales have been distressed, Mr. Rajadhyaksha said.