Real Time Economics is a Wall Street journal blog on economic insight and analysis. On April 24th, the WSJ Blog outlined housing an inventory problem which is very alarming when combined with other factors. Their insight identifies a serious concern compounded by high unemployment. In my opinion, “bubble” prices only become a problem if someone has to sell their home.
In the article written by Mark Whitehouse, the following statistics were highlighted:
As of March 2010, banks had an inventory of approx. 1,100,000 foreclosed homes.
About 4,800,000 mortgage holders were at least 60 days behind on their payments or in the foreclosure process
Based upon the sales pace of foreclosed homes, it would take 103 months for banks to work through the inventory.
Without new jobs being created, an increase in foreclosures could be expected. Also, banks may increase the sales rate of foreclosed homes by lowering prices which will impact appraisals. For those families with jobs but have decided to move, the appraisals will affect the sales price of their home – the vicious cycle continues.
A legitimate question would be “how to you stop this vicious cycle?” The answer is JOBS. However, I would not expect the housing sector adding jobs anytime soon.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment