Whether you believe in the law of gravity or not, it impacts you. Similarly, whether you believe in the law of supply and demand it too has an absolute impact.
Let's start by looking at the supply side of the US Housing Market . . .
In the 3rd quarter of 2009 almost a million homes in the US entered the foreclosure process, an increase of over 22% from the same period in 2008. For your convenience we have provided website addresses for you to cut and paste into your browser to review ...
http://www.realtytrac.com/news/press/newsletter-articles.asp?a=b&itemid=7740&accnt=225575
This represents 1 out of every 136 homes in the country entering the foreclosure process during 3Q09, in some areas the number was as low as 1 in 20 homes entering the process during just this 3 month period!
During the same period, 3Q09, mortgage delinquencies across the country hit a new high ...
http://finance.yahoo.com/news/Mortgage-delinquencies-hit-apf-3335040402.html?x=0&sec=topStories&pos=1&asset=&ccode
having increased 58% from the same period in 2008! With unemployment continuing to rise, and maximum mortgage resets still not due for about another 2 years, which direction will this go?
Combined, this brings the total to almost 4 million homeowners who are either in foreclosure or at least 3 months behind ...
http://finance.yahoo.com/news/Foreclosures-hitting-more-apf-24626172.html?x=0&sec=topStories&pos=2&asset=&ccode
at the end of 3Q09.
Barry Sternlicht, CEO of Starwood Capital Group (who just cut a super sweet deal w/ the govt on distressed assets) stated recently that the total number of "Shadow inventory" could be as high as 12-15 million. While no one knows for certain exactly how many properties banks, financial institutions and investors are sitting on, we do know, for certain, that there are literally millions of people who have not made mortgage payments for months and in some cases for up to 3+ years without being foreclosed upon.
Ok, so what about demand?
According to The National Association of Realtors (notorious for misleading the public) the number of sales in 2010 should be approximately 5.3 million. This represents demand.
You do the math
With about 4 million homes 90+ days delinquent or currently in the foreclosure process, plus who knows how much shadow inventory, plus the rate of foreclosure filings and new delinquencies growing rapidly - what will happen to supply? for how long?
Even if we get to NAR's projected 5.3 million sales next year how will that level of demand even make a dent in the supply?
Bottom line:
US Housing Markets are at least another 5 years from a bottom and will return to price levels similar to those seen in 1996-1998.
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Now that you have been shaken and awakened, what are you going to do to improve your situation?
If you are considering disposing of real estate holdings I strongly encourage you to review www.6weeklistingstrategy.com and find an agent who understands how to use it.
