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Pent Up Housing Supply
Mish's Global Economic Trend Analysis ^ | 10/29/2007 | Mike Shedlock

Posted on 10/29/2007 12:28:44 PM PDT by Freedom_Is_Not_Free

Recent data shows U.S. Home Vacancies Rise to New Record.

A record 17.9 million U.S. homes stood empty in the third quarter as lenders took possession of a growing number of properties in foreclosure.

The figure is a 7.8 percent gain from a year ago, when 16.6 million properties were vacant, the U.S. Census Bureau said in a report today. About 2.07 million empty homes were for sale, compared with 1.94 million a year earlier, the report said.

New foreclosures have risen to a record, led by defaults in adjustable-rate loans to people with tainted or limited credit histories, according to the Mortgage Bankers Association. Home- price declines and tougher lending standards are making it difficult for owners who fall behind in mortgage payments to sell or refinance into better loans.

The U.S. homeownership rate fell for the fourth consecutive quarter to 68.1 percent, seasonally adjusted, from 68.9 percent a year ago, the report said.

Let's stop right there. Did you catch it?

* A record 17.9 million U.S. homes stood empty in the third quarter. * A mere 2.07 million empty homes were for sale.

Let's do the math. There are 15.83 million vacant homes just sitting there. How long can that last?

That is a huge potential supply of homes that for some reason or other is not listed yet. I suspect many of those are REOs (real estate owned ) by banks and mortgage companies like Countrywide. Every passing month those REOs sit on the books waiting for higher prices is lost property taxes, upkeep costs, and balance sheet impairment.

Every month the figures get worse. For example, Countrywide has 13,000+- REOs for sale, but they also have 82,000 foreclosures. That alone represents significant pent up supply as those foreclosures become REOs. See Option Arm & REO Problems At Countrywide for more information.

Add to that pent up supply are those with a second home who want to sell it as soon as they can "get even" on it. In the meantime those people are "content" to rent. That contentment will turn to sour milk given enough time, or any problems necessitating a sale sooner rather than later.

This kind of supply can last for years. In fact, as home prices sink, this kind of supply can grow as people become disgusted with the idea that "real estate prices always goes up".

The siren song from Realtors is that now is the best time to buy ever. Straight up it's easy to see that is a lie. The best time to buy was 10 or more years ago and the best time to sell was in 2005. It's still a long way down from here. Rising inventory, falling prices, and pent up supply should be proof enough.

Mike Shedlock / Mish http://globaleconomicanalysis.blogspot.com/


TOPICS: Business/Economy
KEYWORDS: economy; foreclosure; housing; subprime
Th problems in housing are not just your typical cyclical downturn. The scope is unprecedented.
1 posted on 10/29/2007 12:28:54 PM PDT by Freedom_Is_Not_Free
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To: Hydroshock

Ping.


2 posted on 10/29/2007 12:29:43 PM PDT by Freedom_Is_Not_Free
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To: Freedom_Is_Not_Free

I agree, this think is far from over. Far from over. And no, this is NOT the best time to buy, NAR propaganda to the contrary. It may be the best time to buy in 2010, but not now. Not by a long shot. Is it a bad time to buy? Probably not, if you can get an REO at a true bargain price, if it wasn’t trashed. Is this the BEST time to buy, while prices haven’t even yet begun their free-fall? Prices always lag sales by a long measure. Sales are in free-fall, prices are not. They will be.


3 posted on 10/29/2007 12:32:49 PM PDT by Freedom_Is_Not_Free
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To: Freedom_Is_Not_Free
>> Is this the BEST time to buy, while prices haven’t even yet begun their free-fall? Hang on a sec, I'll look outside and see. OK, I'm back. No blood in the street yet. I'm going to wait a while. (However, I do want to get in BEFORE the Chinese come over by the boatroad with fistfurs of dorrars)
4 posted on 10/29/2007 12:42:03 PM PDT by Nervous Tick
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To: Freedom_Is_Not_Free

Asking the NAR if it is a good time to buy or sell a home is like asking a cur hound whether it is a good time to feed him a steak.


5 posted on 10/29/2007 12:51:02 PM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: Hydroshock; Calpernia; cbkaty; Nervous Tick; ex-Texan; RockinRight; NVDave; Neidermeyer; ...

Economy/Credit/Housing Issues Ping List.

If you want on or off this list let me know.


6 posted on 10/29/2007 12:52:53 PM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: Freedom_Is_Not_Free

Mish rocks. I read everything he writes.

http://globaleconomicanalysis.blogspot.com/


7 posted on 10/29/2007 2:43:29 PM PDT by Travis McGee (---www.EnemiesForeignAndDomestic.com---)
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To: Hydroshock

Asking the NAR if it is a good time to buy or sell a home is like asking a whore.....

Oh, never mind. They ARE whores.


8 posted on 10/29/2007 2:45:08 PM PDT by Travis McGee (---www.EnemiesForeignAndDomestic.com---)
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To: Freedom_Is_Not_Free

bump


9 posted on 10/29/2007 2:50:25 PM PDT by VOA
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To: Travis McGee
That is insulting prostitutes everywhere.
10 posted on 10/29/2007 5:42:03 PM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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place mark


11 posted on 10/29/2007 6:37:08 PM PDT by murphE (These are days when the Christian is expected to praise every creed but his own. --G.K. Chesterton)
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To: Hydroshock

True.


12 posted on 10/29/2007 8:08:36 PM PDT by Travis McGee (---www.EnemiesForeignAndDomestic.com---)
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