Tuesday, August 4, 2009

Don't Believe The Housing Hype

In an earlier post I showed, with plenty of back-up data, that in the next 6-12 months the housing market will be flooded with homes from prime mortgage foreclosures. I showed,using conservative calculations, that the value of that foreclosed inventory can easily reach or exceed the entire size of the $500 billion subprime market.

I didn't mention the "shadow" inventory of homes that currently hangs over the market. The shadow inventory would be the homeowners who are thinking about selling but want to wait until the market "firms" up. Well, today Reuters posted an article titled "'Shadow' Inventory Lurks Over U.S. Housing Recovery." Here's an interesting quote from the article from zillow.com, an online real estate service site:

"The number of homes listed officially on the market, while still at historically high levels, might be only the tip of the iceberg," said Stan Humphries, chief economist at real estate website Zillow.com in Seattle, Washington. (emphasis mine).

A survey of 2,123 adults conducted by Zillow found that the potential number of "shadow" sellers could be as highs as 20 million.

Here's a link to the article:


When you combine the "shadow" inventory with coming tsunami of foreclosure inventory, it is clear that the housing crisis in this country is not even halfway to its bottom. It is my view that housing prices still have another 30-40% of downside before any kind of real bottom is reached.

No comments:

Post a Comment