House foreclosures in recent years have never been this many, not in recent memory, as 7 million homes were repossessed by lenders and the government when the economy tanked in 2008. Many are wondering when the pace will slow down. Because of the uncertainty, many buyers are holding off their plans to purchase as they see that home prices will sink further, waiting for the market to bottom out before shopping for the rich pickings that the housing downturn left in its wake.

When housing bubble burst

After the housing market peaked in 2005 to 2006 - fueled by lax lending and heavy speculation - many homes were then repossessed by banks because property owners could not pay for their mortgages anymore when interest rates started to climb. The increase in house foreclosures flooded the market with properties for sale, driving down prices and left many homes underwater.

It is estimated that about a quarter of all the homes in the US are underwater, meaning the price of these houses are less than the outstanding mortgage. This was made worse by the slowdown in the economy and the rising joblessness in the country, which doubled the homeowners’ problems with keeping their homes.

Homes prices sink

Home prices in several areas in the US have returned to their pre-crisis levels, thanks to record house foreclosures that the world has witnessed every quarter for the last 3 years. Another 2 million house foreclosures are also estimated to happen only this year.

But still, a real estate rebound is yet to happen despite the relatively affordability of homes now. Renting is more of an option than buying as those who have been driven away from their houses choose this route. In addition, only the lucky ones are able to obtain loans as banks tightened their lending standards, keeping away potential homebuyers. It does not also help that many Americans are still jobless.

The Wall Street Journal said that house foreclosures have slowed down in the last quarter after accusations that banks were repossessing homes without proper documentation and careful review of processes.

But no one is sure if this is the signal that foreclosures would decelerate to a trickle. Until the market recovers and the economy picks up, many Americans would still struggle to keep their homes from being repossessed.