Tuesday, 26 July 2011

Shadow inventory means US house prices will fall

(Unless you live in Washington DC near the tax-and-rule hub).
Chart from well-written article by Indiviglio in The Atlantic:

shadow inv goodman 2011-04.png
This shows rising millions of mortgage defaults.  Light blue has been seized by banks but not put on the market.  Dark blue is over a year behind in mortgage payments but hasn't been seized and hasn't been put on the market.           Yes, about 90,000 homes are sold each month but another 60,000 have to be cleared out of the shadow inventory at the same time to make progress.   For monthly sales to reach 150,000, prices will need to fall further in many markets.
The message is underlined by the Shiller History of Home Prices chart.
A normal range is below where we are at.
Individual markets vary greatly but the average is shown.

Added: Charts show US Household debt decreasing, paid-up mortgages increasing. A plus.

1 comment:

  1. Hello..... One way to sell a house that has been in the market for a long time is to motivate the real estate agents. I have learned that reducing the price of the house in order to make it more attractive to buyers doesn't work much. Instead, increasing the commission of the agents is a better way of getting fast action in selling a property. Inform all agents about your new commission scheme and you'll see that they would be scrambling to get your house sold quickly for higher commissions.Read more-house sold prices