Job losses muddy outlook for U.S. housing comeback

By Tom Brown

MIAMI (Reuters) - A pickup in U.S. home sales has kindled hopes for a housing recovery, but plunging prices, rising unemployment and a new wave of foreclosures are clouding prospects for a quick end to the American real estate debacle.

"We're not at the bottom and anybody that's trying to call the bottom right now is crazy," said Jack McCabe, a real estate consultant based in Deerfield Beach, Florida.

"There's a huge foreclosure wave still ahead in the next 12-18 months and still a lot of excess inventory," he added.

Housing is at the heart of the 17-month-old U.S. recession and is key to a turnaround in the broader economy.

Optimistic observers have been talking about a real estate market strengthening as investors jump in to hunt for bargains.

But upbeat talk is undermined by data like the latest S&P Case-Shiller home price index, which recorded a 19.1 percent drop in the first-quarter compared to the same year ago period. It was the biggest decline in the index's 21-year history.

Nevertheless, the Realtor Association of Greater Miami and the Beaches said on Wednesday existing single-family home sales rose 98 percent in Miami in April from April 2008.

But the surge was fueled by a 39 percent year-over-year drop in median sales prices and many people in Miami -- which ranks among the poorest U.S. cities -- are among homeowners struggling to make ends meet as the U.S. unemployment rate heads into what may soon be double digits.

"I'm getting to the point where I'm ready to break down," said Martin Garcia, 48.

The medical laboratory equipment engineer has a prime, 30-year fixed rate mortgage with a 9.5 percent annual interest rate. Homebuyers with secure finances and high credit scores could qualify for mortgages with "prime" financing terms. But Garcia was laid off seven months ago.

He receives about $900 a month in unemployment benefits. But he is down to just $400 in savings and he won't be able to keep up much longer with the more than $800 a month in mortgage and maintenance costs he pays on the Miami Beach apartment he bought in 1989.

"Since I'm unemployed the banks don't want to refinance or do anything," Garcia said.

JOB LOSSES DRIVE FORECLOSURES

One in eight households with a mortgage ended the first quarter late on loan payments or in the foreclosure process, the U.S. Mortgage Bankers Association said on Thursday.

Foreclosures on fixed-rate mortgages, given to solid borrowers with good credit, represented the largest share of new foreclosures for the first time since the rapid growth and ensuing collapse of the subprime "toxic" loan market.