How many months, at current sales rates, would it take to clear housing inventory of all the...


How many months, at current sales rates, would it take to clear housing inventory of all the foreclosed homes and those likely to be foreclosed in the next couple of years? 103.
Comments (41)
  • D. McHattie
    , contributor
    Comments (1844) | Send Message
     
    The only thing that will increase sales rates and clear out the backlog of inventory is lower prices.

     

    But don't worry - the government will spend all the money it doesn't have to prevent this from happening.
    24 Apr 2010, 08:11 AM Reply Like
  • Tatertot
    , contributor
    Comments (146) | Send Message
     
    lowering the price of homes will increase sales, yes. However, you'll also get more foreclosures as more people walk away from mortgages that they are underwater on. The question then becomes which effect would dominate, and I'm not sure that it's quite as easy as you make it out to be. In this downcycle, buyers have been very reticent to buy even as prices were slashed, but there has been an increasing amount of people walking away from their mortgages as they go underwater. So, I'm not sure that just having housing prices lowered is going to really clear the inventory faster.
    24 Apr 2010, 10:07 AM Reply Like
  • Michael Clark
    , contributor
    Comments (11594) | Send Message
     
    We need lower prices for ALMOST EVERYTHING. The inflation of our economy over the last 20 years can only be corrected by a prolonged deflation, which we're denying now, pretending we can inflate our way out of massive insolvency.

     

    Stages of death:
    Denial
    Anger
    Bargaining
    Depression
    Resignation.

     

    As I say, we are still, as a nation (our leadership at least, and our financial leaders, and Bernanke certainly) in the denial stage.
    24 Apr 2010, 11:07 AM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
     
    ahhh, key words..."at current sales rates". Look for more cliff dives 'cause here comes Alt-A and Option Arm resets folks.
    24 Apr 2010, 08:29 AM Reply Like
  • bbro
    , contributor
    Comments (11223) | Send Message
     
    So the whole 4.9 million that is delinquent is going to be foreclosed on???? Somebody check the current sales rates....Market guy
    is this the data you accept as legit???
    24 Apr 2010, 08:38 AM Reply Like
  • bbro
    , contributor
    Comments (11223) | Send Message
     
    Isn't the monthly sales rate between 400,000 and 500,000 a month???

     

    somebody check me that...haven't had my coffee yet....
    24 Apr 2010, 08:44 AM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
     
    bbro, 3 words..."expired tax credit". That's the "cliff". Many were using it as their bank required downpayment. I see it as cash they would not have otherwise.
    24 Apr 2010, 08:53 AM Reply Like
  • Tack
    , contributor
    Comments (16281) | Send Message
     
    MG:

     

    Do you honestly believe that any lender, in today's post-crisis world, is using a future tax credit as acceptable downpayment for a home purchase? So, that means either the buyers can meet cash requirements on the front end, or they can't.

     

    The doomers all said auto sales would collapse after the close of the clunker program, too. Last I looked, they are accelerating higher.

     

    Housing gloomers will wind up in the exact same dog house.

     

    Even more relevant, this economy is improving nicely without even housing being a significant participant. That is very positive indeed because it means that gains in spending are coming from earnings sources other than HELOC bubbles.
    24 Apr 2010, 11:48 AM Reply Like
  • D. McHattie
    , contributor
    Comments (1844) | Send Message
     
    Fannie and Freddie are doing precisely what you state that no lender in their right mind would do.

     

    www.fanniemae.com/home...

     

    They are trying to re-inflate the housing bubble with precisely the tactics that inflated it in the first place which, coincidentally, were the seeds of the bubble's downfall.
    24 Apr 2010, 12:14 PM Reply Like
  • Tom Au, CFA
    , contributor
    Comments (6879) | Send Message
     
    Do you really believe that the heavily indebted, underemployed consumer can step up purchases of both cars AND houses? Yes, car sales are rising, because "strategic defaulters" (of houses) may be planning to live in them.
    24 Apr 2010, 01:00 PM Reply Like
  • Tack
    , contributor
    Comments (16281) | Send Message
     
    Yeah, that massive 0.86% of all mortgages that strategically default, not to mention the other owners (30+%) with no mortgages, as well as all renters in America. The whole world will certainly be brought to its knees by strategic defaulters.

     

    Excuse me, if I don't stay up late waiting.
    24 Apr 2010, 02:32 PM Reply Like
  • Niner
    , contributor
    Comments (790) | Send Message
     
    I regret that I only have one thumbs up to give.................
    24 Apr 2010, 02:45 PM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
     
    Tack,

     

    yes I do. One of them was one of my homes. The buyer did exactly that. 2 others were good friends of mine who sold property as well. Our neighbors next door own a large realty business and talk of the high frequency of this very occurrence.
    24 Apr 2010, 07:31 PM Reply Like
  • bbro
    , contributor
    Comments (11223) | Send Message
     
    Good morning..I understand...but isn't the sales rate off??? Without
    the tax credit it wouldn't get lower than 400,000 if i am looking at he numbers right....
    24 Apr 2010, 09:01 AM Reply Like
  • Tatertot
    , contributor
    Comments (146) | Send Message
     
    bbro, the numbers they were using were bank sales per month, not existing sales. So, if it was like ~100k bank sales per month (seems reasonable, but I have no idea whether it is that or not), you'd get roughly 100 months. They acknowledge that bank sales could increase, but that that would put a damper on prices. It's more of a neat sideshow statistic than one to base investing decisions on, as no one expects bank sales to stay constant, especially if the bulls are right and household formations increase. But it does illustrate the problem at hand, in that there is a huge overhang of homes that will make the recovery in housing much more difficult and drawn out.
    24 Apr 2010, 09:41 AM Reply Like
  • bbro
    , contributor
    Comments (11223) | Send Message
     
    I wonder how much of the 3.5 million existing home inventory is
    actually bank inventory.....
    24 Apr 2010, 10:10 AM Reply Like
  • zorrow
    , contributor
    Comments (2629) | Send Message
     
    According to Goldman, "Too many people owe too much more on their homes than they can afford." Gee, I wonder how that happened?
    24 Apr 2010, 09:04 AM Reply Like
  • bbro
    , contributor
    Comments (11223) | Send Message
     
    1.1 million+ 4.8million +3.5 million divided by 400 =23.5 months....
    24 Apr 2010, 09:14 AM Reply Like
  • bbro
    , contributor
    Comments (11223) | Send Message
     
    On the flip side the housing starts to nonfarm payrolls ratio is now .482% after hitting a low in April 2009 at .364%.....it started the recession at .751%
    24 Apr 2010, 10:33 AM Reply Like
  • Jeff Nielson
    , contributor
    Comments (2449) | Send Message
     
    Bbro, here's a Shakespeare quote which you might like to ponder:

     

    "Methinks the lady dost protest too much."

     

    Could you explain to people why you required TEN COMMENTS to express ONE thought?

     

    Could this be one of the reasons you have a -2200 "commenters rating"?
    24 Apr 2010, 11:20 AM Reply Like
  • bbro
    , contributor
    Comments (11223) | Send Message
     
    Good...i thought it was my B.O.
    24 Apr 2010, 11:56 AM Reply Like
  • Econdoc
    , contributor
    Comments (2938) | Send Message
     
    this whole piece is...Much ado about nothing...

     

    the article is asinine

     

    yes. if all - ALL - the houses reverted to the banks and had to be sold by them - at the rate they are currently - CURRENTLY - selling them it would take that long. BFD

     

    no mention of household formation - about 1 million per year in a normal year - probability that all will revert? 100%? sure. bet on that.

     

    Jeff Nielson you are an ambulance chasing shill.

     

    E
    24 Apr 2010, 12:40 PM Reply Like
  • Jeff Nielson
    , contributor
    Comments (2449) | Send Message
     
    Speaking of "chasing", it's funny how you "show up" so often immediately after I post a comment.

     

    Has Seeking Alpha hired you to do "damage control" for their spammers?
    24 Apr 2010, 01:02 PM Reply Like
  • bbro
    , contributor
    Comments (11223) | Send Message
     
    -5....for a bad joke???......harsh crowd.....
    24 Apr 2010, 04:04 PM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
     
    I gave you an up...you made me laugh.
    24 Apr 2010, 07:34 PM Reply Like
  • j-dub
    , contributor
    Comments (1235) | Send Message
     
    Yep, both econo and bbro have arrived right on time to save the bankster apologist Tack. Tack, what bank do you work for? Don't even try to deny it. There is not once ounce of objectivity in your posting although you do attempt to conceal your true devotions.
    Everything is now right in the SA world as the three, as usual, desperately attempt to keep the status quo of the current wall street/d.c. regime intact.

     

    Move along, folks, move along. Just a little temporary crisis. All over, nothing to see anymore. Whew, that was a close one. Anyway, get yer house here, get yer house. Free WhirlPool appliances here wit yer house!!!!!
    (Right guys?)

     

    Sorry boys, but THIS IS NOT MY AMERICA
    24 Apr 2010, 08:43 PM Reply Like
  • Tack
    , contributor
    Comments (16281) | Send Message
     
    Gosh, found out, again. I work for a bank and didn't even know it. Amazing the things that occur that you don't even realize.
    24 Apr 2010, 10:37 PM Reply Like
  • Econdoc
    , contributor
    Comments (2938) | Send Message
     
    nice work Shillosaurus...but you missed an opportunity to pump up that POS site of yours...which you do at every opportunity...remarkable how NOBODY else references that rag of YOURS.

     

    E
    25 Apr 2010, 01:07 PM Reply Like
  • Jeff Nielson
    , contributor
    Comments (2449) | Send Message
     
    It's REALLY nice to see some realistic numbers AND realistic analysis about the U.S. housing market.

     

    If anyone is interested in further reading on WHY the collapse of the 2nd U.S. housing bubble will be worse than the first; and more details on the SYSTEMIC Wall Street fraud which CREATED these bubbles, here's a couple of reads.

     

    "More U.S. Mortgage-Fraud"
    www.bullionbullscanada...

     

    "U.S. Bankruptcies Spike 35% in One Month"
    www.bullionbullscanada...
    24 Apr 2010, 11:24 AM Reply Like
  • Duude
    , contributor
    Comments (3413) | Send Message
     
    What I find hard to determine is at what rate of new job creation will we reverse the urge for many to walk away from their underwater property? We're expecting a bump up in employment numbers over the next few months due to temporary census jobs, but these aren't jobs people will leverage to purchase a home, as they will reenter the pool of unemployed thereafter. Additionally, a large percent of those who have qualified for debt refinancing through the government (Fannie and Freddie), are later falling into foreclosure anyway.
    24 Apr 2010, 11:25 AM Reply Like
  • Jeff Nielson
    , contributor
    Comments (2449) | Send Message
     
    Duude, that's a good question. The problem is that the American public (and the entire world) have been fed month-after-month of absurdly fraudulent "jobs reports" by the Bureau of Labor Statistics.

     

    In the REAL world, the U.S. economy is still losing at least 500,000 jobs per month (on a net basis) - and probably closer to 1 million.

     

    "Largest U.S. Jobs-Lies Yet"
    www.bullionbullscanada...
    24 Apr 2010, 11:59 AM Reply Like
  • Tack
    , contributor
    Comments (16281) | Send Message
     
    Let's put this "walking-away" phenomenon, so plastered throughout the media, into some factual perspective, so we can reveal it to be the manageable issue that it really is:

     

    Currently, approximately 3.3% of mortgages are in default (www.dsnews.com/article...), and a recent study has estimated that 26% of defaulted mortgages are "strategic" defaults, i.e., intentional defaults. That means of the whole FHA universe of mortgages, a not-so-astounding 0.86% of mortgages result in strategic defaults from "walk-aways."

     

    Obviously, this is not an overwhelming number in the overall scheme of things, yet the popular media would have everyone believe this is some sort of epidemic. Those that follow the media rhetoric, rather than the actual data, will be led to erroneous conclusions about the realty market and the economy, as a whole.
    24 Apr 2010, 12:22 PM Reply Like
  • Jeff Nielson
    , contributor
    Comments (2449) | Send Message
     
    Your number is a TOTAL LIE. In the "real world", 15% of ALL U.S. mortgages are either in default or foreclosure.
    24 Apr 2010, 12:30 PM Reply Like
  • Tack
    , contributor
    Comments (16281) | Send Message
     
    Too bad you can't make the font size bigger on SA, so you could shout a bit louder.
    24 Apr 2010, 02:23 PM Reply Like
  • Tack
    , contributor
    Comments (16281) | Send Message
     
    Oh, by the way, please provide links to reliable authorities on the 15% default/foreclosure rate.

     

    This is a blatant misrepresentation, probably intentional, as while the current deliquency rate is ~13%, only a decided minority of behind-on-payments mortgages ever reach foreclosure.

     

    No amount of screaming and yelling (CAPS) will turn your numbers into the facts that you imagine they are.
    24 Apr 2010, 02:29 PM Reply Like
  • Niner
    , contributor
    Comments (790) | Send Message
     
    You talk about the "Real World". Based on some of the crap you post, I'm not for sure you live in the real world. The Dow closed above 11200, new housing sales were up 28% and the great majority of the earning reports have been positive. And, these are all lies? I dn't think so. Somebody slap this guy a couple of times and see if he wakes up!
    24 Apr 2010, 03:03 PM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
     
    Wait...did you just say "real world" and then talk about the artificial dow pump, Mark to make believe earnings and home sales on a non seasonal adjusted basis??

     

    I think that "slap" is a bit misdirected there Niner my friend. Scratch the surface a bit and see a world that would baffle Willy Wonka.
    24 Apr 2010, 07:40 PM Reply Like
  • Econdoc
    , contributor
    Comments (2938) | Send Message
     
    alright Shillosaurus calm down...

     

    for those of you who want an alternative to the gospel of Jeff the Righteous...see below.

     

    It is simpleminded to think that any tool gives an exact count. The best you can do is estimate using a consistent, fact based and transparent method. Which is what they do.

     

    www.bls.gov/web/empsit...
    CES Net Birth/Death ModelIn 2010, the CES sample includes about 140,000 businesses and government agencies drawn from a sampling frame of Unemployment Insurance tax accounts which cover approximately 410,000 individual worksites. The active CES sample includes approximately one-third of all nonfarm payroll workers. The sample-based estimates are adjusted each month by a statistical model designed to reduce a primary source of non-sampling error which is the inability of the sample to capture, on a timely basis, employment growth generated by new business formations. There is an unavoidable lag between an establishment opening for business and its appearing on the sample frame and being available for sampling. Because new firm births generate a portion of employment growth each month, non-sampling methods must be used to estimate this growth. Earlier research indicated that while both the business birth and death portions of total employment are generally significant, the net contribution is relatively small and stable. To account for this net birth/death portion of total employment, BLS uses an estimation procedure with two components: the first component excludes employment losses from business deaths from sample-based estimation in order to offset the missing employment gains from business births. This is incorporated into the sample-based estimate procedure by simply not reflecting sample units going out of business, but imputing to them the same trend as the other firms in the sample. This step accounts for most of the net birth/death employment. The second component is an ARIMA time series model designed to estimate the residual net birth/death employment not accounted for by the imputation. The historical time series used to create and test the ARIMA model was derived from the UI universe micro level database, and reflects the actual residual net of births and deaths over the past five years. The net birth/death model component figures are unique to each month and exhibit a seasonal pattern that can result in negative adjustments in some months. These models do not attempt to correct for any other potential error sources in the CES estimates such as sampling error or design limitations. Note that the net birth/death figures are not seasonally adjusted, and are applied to the not seasonally adjusted monthly employment estimates to derive the final CES employment estimates.
    25 Apr 2010, 01:30 PM Reply Like
  • Econdoc
    , contributor
    Comments (2938) | Send Message
     
    any FACTS to support this statement, Shill? Call someone a LIAR you better put up some hard evidence or you shred your credibility. You Shill.
    25 Apr 2010, 01:33 PM Reply Like
  • Karen Consumer
    , contributor
    Comments (155) | Send Message
     
    I live in a mobile home park, where the average single wide home sells new for $40,000, not including lot rent. The park is owned by Hometown America (they have a web site, so you can verify this on your own). We currently have 2 houses for sale on our block, both under $40,000, and they've been for sale for at least 3 months. The house purchase/lot rent price combined averages $750 a month (3 bed/2 bath). The property even lets you buy if you only have a T.I.N., not a social security number. The houses in this price range aren't budging.

     

    Yet our local news says that our area is facing a housing shortfall. Builders are increasing sales of new homes.

     

    I think all media are smoking from the same government crack pipe. If you can't sell a mobile home for under $40,000 to the average working family, how the hell can you sell a $150,000 brick and mortar home?
    24 Apr 2010, 01:53 PM Reply Like
  • Archman Investor
    , contributor
    Comments (3320) | Send Message
     
    Here is my favorite article and headline from Saturday mid-day:

     

    <<E-mails show Goldman boasting as meltdown unfolds>>
    <<In e-mails, Goldman Sachs executives boast of profit-taking as housing market collapses>>
    finance.yahoo.com/news...=

     

    The pretend and delay the inevitable continues. In America no one is allowed to fail anymore. Not anyone's kids who suck at sports, not banks, not broke homeowners who shouldn't be buying crap they cannot afford, no one.

     

    It is "lets play pretend" until the music stops. The music is the 0% FED funds rate, a completely inept government, regulatory body and corrupt congress, et al. A corrupt and lying media, etc.

     

    So what do we do? Why hell we just keep on buying. Stock are going to DOW 40K by next year. All fantasy, all the time.

     

    I have my chair already reserved for me once the music stops. It is there and no one is allowed to sit in it.

     

    The average American: they will be left standing there wondering where all the seats went as they are then dragged off the dance floor kicking and screaming, yelling "Its not fair, its not fair, no one warned us, our I-Phones, and I-Pads, and Facebook accounts didn't tell us what to do, no one is taking care of us waaahhh, waaahhh.

     

    Oh well. Thank goodness they have those I-Phones and Facebook accounts because that is all they are going to have left to their names.

     

    www.compdivplan.com
    24 Apr 2010, 02:34 PM Reply Like
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