Note: Hello my ever-important readers! It has been about a month since I last posted anything substantial here. I promise I have not forgot about you! Between the start of the busy real estate season and two nasty colds, things sort of got put on the back burner. However, I am now fully recovered and I would expect the rate of posts to increase back to where it previously was. Thanks for stopping by!
Article Link: http://www.nytimes.com/2011/05/23/business/economy/23glut.html?hp
If you have a few minutes, I would encourage you to read this article. It is a great example of what continues to ail the housing market - huge backlogs of inventory that buyers have been slow to buy up, leading to a (significant) drop in home values. I think the big picture here is that we simply have no idea of knowing how much inventory any of the big banks are holding.
We can tell from a quick scan of the market that about half - 50% - of the market is either 1) short sales, or 2) foreclosures. In both situations, banks are the sellers. This fact is enticing banks to be very careful about how much inventory they let on the market. If they instantaneously dropped a bunch of houses on the market, intuition would tell us that it would cause prices to soften even more so than they already have. But do the banks really want to be in the real estate business over the long-haul? All of these are questions that bank executives have to be asking themselves. I would love to be a fly on the wall in those meetings!
