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Five Reasons the Housing Market Has Not Recovered

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No. 1: High Unemployment No. 1: High Unemployment

Without a job, you can't buy a home. The U.S. unemployment rate fell to 8.2% in March, but underemployment is above 20% in California and Florida.

No. 2: Underwater Borrowers No. 2: Underwater Borrowers

More than 11 million Americans — owning roughly 23% of all mortgaged residential properties — owed more on their mortgage in the first quarter than the home is worth, according to CoreLogic.

No. 3: Shadow Inventory No. 3: Shadow Inventory

Nearly four million Americans are at least 90 days late paying their mortgage or are in the process of foreclosure, according to Lender Processing Services.

No. 4: Stagnant Incomes No. 4: Stagnant Incomes

Median incomes fell 7% from 2000 to 2010, according to the Census Bureau. Homebuyers typically are not supposed to spend more than four times their average income buying a home.

No. 5: Tight Underwriting Standards No. 5: Tight Underwriting Standards

The average homebuyer in March had a credit score more than 100 points above the 620 to 640 minimum for a conventional loan from Fannie Mae or Freddie.

Major headwinds are holding back a full housing recovery, despite signs of life in the market.