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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsNext Housing Bailout:Banks Need to Offload Millions of Unwanted Homes. Guess Who's Going to Buy Them
http://www.counterpunch.org/2012/01/23/the-next-housing-bailout/Why are housing prices falling when the number of houses on the market continues to decline? Usually, when supply shrinks, then prices rise, right? So, why isnt that happening now?
The reason is that housing market never completely cleared, which is to say that the Feds interventions and the manipulation of inventory by the banks prevented the market from finding a bottom. So, now a full 6 years after the peak in home sales in 2006the real estate depression continues while prices drift lower still. Andheres the bad partno one knows how much farther prices will drop, because the existing inventory of homes on the market (according to the Wall Street Journal) is presently 1.89 million while the shadow inventory (according to CoreLogic) is 1.6 million units which represents another 5 months supply, the same level as reported in July 2011. So were back to Square 1.
Heres more from Corelogic:Currently, the flow of new seriously delinquent loans into the shadow inventory has been offset by the roughly equal flow of distressed (short and real estate owned) sales. CoreLogic estimates the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent (90 days or more), in foreclosure and real estate owned (REO) by lenders. (Calculated Risk)
So, theres a mountain of backlog to work-off before the market touches bottom and prices stabilize. But even that doesnt accurately describe the troubles facing the market. The biggest obstacle to any real recovery is the millions of distressed homes that are set to come onto the market in the next few years. Those numbers will swell by many orders of magnitude when the banks and the 50 Attornies General agree to a settlement on the Robosigning fiasco some time in early 2012. When an agreement is finally reached, a flood of foreclosures will pour onto the market pushing down prices, wiping out precious homeowner equity, further eroding bank balance sheets, and forcing more underwater mortgage holders to walk away. Heres how CNBCs Diane Olick sums it up:
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Next Housing Bailout:Banks Need to Offload Millions of Unwanted Homes. Guess Who's Going to Buy Them (Original Post)
stockholmer
Jan 2012
OP
sounds like we're are about to get stuck bailing out another too big to f(j)ail jackass
leftyohiolib
Jan 2012
#3
RC
(25,592 posts)1. Sounds as if we are all gonna drown.
Those that bought a home for a place to live will be OK - If you can keep it. If you bought one for investment purposes, not do much.
Missy Vixen
(16,207 posts)2. We bought 11 years ago
We bought significantly less than what we qualified for - in other words, we bought the smallest house in the neighborhood. We may STILL take a bath.
Truthfully, it is difficult to know what to do. Those of us in a house that may never sell for anything close to the original price really don't have a lot of options.
leftyohiolib
(5,917 posts)3. sounds like we're are about to get stuck bailing out another too big to f(j)ail jackass