Random thoughts on recovery and housing inventory

02 September 2010
Posted in Housing | Trends

My money is firmly in the camp of Third Quarter Slowdown Marked by a Weak Housing Market. Hey - it's all good for buyers looking for a once-in-a-lifetime bargain. I'm convinced of a higher than publicized shadow inventory which will soon have a bearing on market prices. We need to get rid of excess inventory (which will only result from a stronger broad economic recovery and/or weakening housing prices). For an analysis of both sides of this "Shadow Inventory" coin check out this article: Real Estate Inventory Overflow Threatens Housing Recovery, Lita Epstein, Housing Watch, Aug 30, 2010:

If you had a crystal ball and could look into the future you could probably answer the question as to how many more foreclosures will happen in the U.S. Since economists don't have that magic ball, they're trying to calculate not only the current shadow inventory (those homes already foreclosed, but not on the market), but also the "shadow" shadow inventory (those homes yet to enter foreclosure).

The "shadow" shadow inventory is purely speculative because it looks not only at those homeowners now delinquent, but also those whose homes are underwater (and who may walk away), as well as those who lose a job and end up in foreclosure. So you shouldn't take any bets on the "shadow" shadow inventory just yet.

Tax credits? Prisoners say sure!

02 September 2010
Posted in The News

We're all seeing the ultimate folly of the now expired homebuyer tax credit. The government spent a lot of time and money for little real stimulus and price stabilization ultimately kicking the bad housing market can down the road a little while - presumably hoping to stave off the reality of housing's woes until after the mid-term elections hit (it's easy to be cynical in these times). But articles like these help you to keep losing faith that any adult is in charge: Prisoners cashed in on homebuyer tax credit, Aarn Smith, CNNMoney, Jun 23, 2010:

More than 1,200 prison inmates, including 241 serving life sentences, defrauded the government of $9.1 million in tax credits reserved for first-time homebuyers. ...Treasury's inspector general also found that thousands of people filed multiple claims or made claims outside the allotted time period. In all, more than $28 million was improperly doled out.

...According to the report, 4,608 state and federal inmates filed for these tax credits, and that fraudulent refunds were doled out to 1,295 of them. The inspector general's report said the most "egregious" fraudsters were 715 prison lifers, including 174 who filed with the help of paid preparers. From this group, 241 lifers were awarded $1.7 million.

Bankrate.com: Mortgage rate update

27 August 2010
Posted in Financing

Apartments performing better - Vacancies dropping nationwide

26 August 2010
Posted in Investing | Trends

From Apartment market shows signs of improvement, Amy Hoak, MarketWatch, Aug 9, 2010:

The apartment industry often doesn't improve until the job market strengthens, and workers gain the confidence to drop their roommate and get a place of their own or move out of their parents' basement.

But recent measures show that vacancy rates are falling and confidence is rising in rental markets -- specifically in apartment buildings -- despite only subtle improvements in the nation's employment picture.

"We certainly see the increase in rental demand in 2010, and it's been a little more, frankly, than most apartment experts had anticipated," said Mark Obrinsky, chief economist and vice president of research for the National Multi Housing Council. Demand for apartments has risen significantly this year, said Greg Willett, vice president of research and analysis for MPF Research, which analyzes apartment trends. "There's no way to look at these apartment numbers and not be impressed," he said.

June vacancy rates in the largest 64 markets in the country averaged 6.6%, down from 8.2% at the end of 2009, according to MPF Research. Rents are also on the rise, Willett said.

The apartment market absorbed 215,000 units in the first half of the year, and at this rate, the market will absorb a little more than 300,000 units by the end of 2010, Willett said. Absorption is the net change in the number of units physically occupied.