Like everyone else in the industry, I am forever hearing the question "Will prices get lower?" While I have no crystal ball, it is fair to say that the market will get worse before it gets better. Why? The market right now is artificially high. As I have pointed out in previous blogs, the banks are not only flooded with inventory, but they are holding thousands of properties off the market - referred to as shadow inventory. This is to prevent real estate prices from a total collapse.
So, if you think that prices have hit bottom, just keep in mind that it is precisely the opposite. Real estate prices are being artificially propped up by keeping much of the supply off the market.
http://www.dailyfinance.com/story/real-estate/housing-market-outlook-2011-unsettled-underwater-unsold/19745450?a_dgi=aolshare_email
By the way, please never ever read a NAR (National Association of Realtors) article, so-called economic report or anything they distribute as anything but propoganda or advertising. Look at such articles as you would a toothpaste or deodorant advertisement.
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In my point of view. I think the major function is the Shadow Inventory which is playing for keeping the real estate prices artificially high. So that can be one of the major functions.
ReplyDeleteThe shadow inventory is very large — probably in the ball park of $1.3T worth of residential real estate if we include seriously delinquent mortgages not yet being foreclosed — and this will grow unless mortgages in the foreclosure pipeline are liquidated more rapidly. The likely impact of this on the broader economy is troubling. Overly indebted people who are trying to remain in homes they cannot afford will leave many with crippled finances when compared with the rest of us. The debt burdens will wreak havoc on these people’s lives. This will hurt their efficiency, because they will focus a great deal of energy and financial resources toward solving an unsolvable problem, and this will hurt the overall economy.Nice information.
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