A couple of days ago I put up a post that reviewed returns on homes for the past decade. Here’s a bit more recent history via a great graph from CalculatedRisk.com. (click for a larger image)

Pretty awful isn’t it? Basically, we’re going nowhere which shouldn’t be at all surprising. The similarity to the S&L real estate debacle is eerie. Then we spent four or five years playing around with all sorts of schemes to avoid the pain of realizing value and clearing the market. The buzzword then was “regulatory goodwill.” Today we talk about modifications and foreclosure moratoriums as we seek to evade the inevitable.

Take the losses and move the inventory and this chart will start to look different. Keep on trying to deny reality and housing is not going to start to recover. Do what you want to ease the pain for those who will lose their homes, but finally admit that lose them they must for rec0very to commence.