Two conflicting reports confuse the public
Real estate professionals are in a daze lately of what statistics to believe in. First, The Wall Street Journal has published a report that says it will take nine years before the inventory of foreclosed homes is absorbed. It states, “As of March, banks had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier, according to estimates from LPS Applied Analytics. Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier. Based on the rate at which banks have been selling those foreclosed homes over the past few months, all that inventory, real and shadow, would take 103 months to unload. That’s nearly nine years. Of course, banks could pick up the pace of sales, but the added supply of distressed homes would weigh heavily on prices — and thus boost their losses.”
And they definitely have a point. Now that the first time homebuyer tax credit is through, we should be expecting added inventory. It’s a wobbly real estate future indeed and the WSJ has some credible numbers to put out in the open.
But this has gotten me startled. CNNMoney.com reports that in some areas, real estate agents are complaining that they don’t have enough homes to sell. Quite impossible, isn’t it? The report states, “In some areas, supplies are even bidding-war tight. In Denver , for example, supply has fallen to 5.7 months from 6.2. In Phoenix it has declined to 4.5 from 5.2; and in San Francisco inventory has halved, to 3.2 months from 6.5 last March. In California , almost all cities have a short supply of single-family homes. That’s especially true in the lower-priced categories, according to Leslie Appleton-Young, chief economist for the California Association of Realtors. The supply of homes that sell for less than $300,000 is at 3.2 months statewide, down from an already low 3.3 month supply 12 months ago. Inventory of moderately priced homes, those between $300,000 and 500,000, fell to 4.2 months in March, down from 4.5 months in March 2009. There are plenty of more expensive homes in California , but this inventory is going quick: inventory for million-dollar-plus homes has dropped from 21.6 months to 10.9 months.”
The bargain prices are fueling these markets and it must be taken into account that the recently expired tax credit has a lot to do with these numbers. It’s really convincing how the report presents the rate at which inventory is depleting. This goes to show that buyers must consider looking for homes in these cities and have a bounty of low-cost, high-quality choices.
So here’s my conclusion: WSJ presents a nationwide analysis whereas CNNMoney.com is more state-focused. Looking at these numbers, one should realize that while there are home inventories fast plunging, the rest of the country is still waiting for a much needed buyer turnout.
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