Two years ago the following four statistics were charted to demonstrate that a housing market recovery was unlikely before 2014.  These graphs were updated 12 months ago and again today in the analysis below.

A Graphical Illustration Why the Downturn Will Persist Through 2013 - 5/11/2009

"Why Housing Will Not Fully Stabilize and Recover Before 2014" or "You Would Have to Be Fool to Buy a House Now" - 5/5/2010

The graphs are primarily supply-side, and ignore other important reasons why a recovery is unlikely including: psychology, perception of risk, credit availability, increasing housing leverage, the absence of affordable mortgage characteristics, looming ARM resets, inevitable foreclosures, high rates of distressed sales, and the reality that housing prices remain overvalued based on historical metrics.

What is interesting about the annual updates is that in each supply-side case, the likelihood of the housing market stabilizing by 2014 has decreased.
  


The number of Vacant Housing Units has not declined over the past two years.  As such, the steepness of the slope required to reach stability by 2014 continues to increase.  The number of Vacant Units needs to fall by approximately 1.8 million a year through 2013 to reduce excess supply and reach a level consistent with price stability.  
    

 
While the percentage of Housing Units Vacant has improved modestly, figures remain elevated relative to pre-bubble levels and Units would have to fall by 1.3 million a year to normalize by 2014.
 

 
For Sale Only Units have fallen from the peak, but made little progress over the past 12 months.  The figure remains almost 600 thousand above the level consistent with price stability.  Units For Sale need to fall dramatically over the next 3 years for housing to stabilize in 2014. 
 

   
It is interesting that Homeownership is the one housing statistic that has continued to revert towards pre-bubble levels despite command-economy, housing price manipulation.  While high prices have kept buyers at bay, overlevered and underwater "owners" have continued to lose their houses as rapidly as they acquired them during the boom.  As long as the Government doesn't provide homeowners with anymore "help", it is possible that the Homeownership Rate might be the first market characteristic to reach pre-bubble levels and reduce downward pressure on prices. 


Propping up housing prices with Stimulus programs, foreclosure mitigation efforts and subsidized mortgage rates has been a disaster.  Not only have the efforts failed to stabilize prices, they have prevented the market from clearing and supply-side pressures from rationalizing.  It appears (as argued since 2008) that Obama/Bernanke have extended the housing depression by years to no productive end.