Earlier this week I did a piece on television about how many job seekers are frozen in place because they can’t sell their homes to relocate for a new job.

More than a quarter of U.S. borrowers owe more on their mortgages than their homes are currently worth. We call that in a “negative equity position” or “underwater.”

“I had an example last week of someone who was on the East Coast and there was an opportunity on the West Coast. Great paying job, and the family just could not afford to take a $250,000 loss on their house. That employee, prospective employee had to forgo that opportunity,” recalled Gary Burnison, CEO of Korn Ferry International, an executive recruiting firm.

I decided to dig a little deeper into this phenomenon and found another fascinating story: Temporary corporate housing is seeing a boom, and it’s not just in big rental apartment buildings. Job seekers are actually renting out their own homes as corporate housing, so they can take a job somewhere else and not have to sell at a loss.

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Not to sound like a broken record, but only when we work through the vast inventory and shadow inventory of foreclosed properties, can home prices bottom and housing recover overall. Obviously certain markets are more burdened by the distress than others, but it’s a universal truth.

In April, however, the percentage of investors and all-cash buyers in the market dropped a bit. Investors have been buying the lion’s share of foreclosures, as first-time home buyers continue to play a very small role in housing’s recovery. First-time buyers should be about 40 percent of the market, but realtors say they are now about 36 percent. They made up nearly half of the market last Spring, but that was all thanks to the home buyer tax credit.

In addition to a tough job and mortgage market, first-time buyers are also looking at a lot of work when buying a foreclosed property.

I found this survey from Campbell/Inside Mortgage Finance particularly interesting this month:

For the month of April, 45% of foreclosed properties were damaged and not inhabitable without renovation. Because mortgage financing is generally not available for foreclosed properties that need major repairs, investors often buy these properties for cash. Fifty-five percent of damaged foreclosed properties were bought by investors in the month of April, while only 27% were bought by first-time homebuyers.

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The current supply of homes on the market is the best indicator of the future health of the housing market.

Let me say that again: Inventories matter.

Despite the fact that inventories of newly constructed homes fell to a 7.3 month supply in March from an 8.2 month supply in February, builders put 10.6 percent fewer holes in the ground in April.

You would think that all this new job creation, which usually goes hand in hand with housing starts, would push the starts up. Nope, both starts and permits fell in April.

Now a lot of folks are blaming this phenomenon on the weather, with tornadoes and rain throughout much of the Southeast. “The National Climatic Data Center reported that April ‘was an historic month for severe weather across the Southeast region,’ If we exclude the 23 percent m/m fall in housing starts in the South, overall starts would have risen to 599,000,” notes Capital Economics’ senior economist Paul Dales.

I’m sorry, but I really don’t buy the weather story. Yes, I’m sure it had some effect, but permits were also down 4 percent, and home builder confidence is stuck in the basement, with builders reporting weak buyer traffic and a drop in sales expectations over the next six months. This does not make a builder build.

So back to my inventory issue.

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Today the Obama administration released its monthly “scorecard” for the Making Home Affordable Program (MHA), a.k.a. the federal mortgage bailout. The Home Affordable Modification Program (HAMP), which is part of MHA, continues to add trial modifications at about 29,000 per month and permanent modifications, a bit less, at 26,000. The redefault rate on the permanent modifications is now at 12 percent.

This month the administration released the first numbers on its Home Affordable Foreclosure Alternative program (HAFA), which pays borrowers $3000 to vacate their homes through short sales (where the bank agrees to let the home be sold for less than the value of the mortgage) and deeds in lieu of foreclosure (essentially giving the keys back to the bank). Banks get monetary incentives as well for that. So far 4500 borrowers have vacated their homes under this program.

It should be noted that in the past two weeks members of the House of Representatives voted to abolish the government’s mortgage bailout, including the HAMP and HAFA programs. It’s interesting that in light of that, the usually optimistic administration put forth this statement:

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