This from my Arizona Republic real estate column (permanent link):
Do you feel an insatiable urge to rush right out and buy a house?
There’s a reason for that: You’re being conned into thinking there is a shortage of available housing, when the exact opposite is actually the case.
Maybe conned is too strong a word. Are you begin misled? Are experts and pundits themselves misled? Are we all of us suffering under a mass delusion, an amplified species of wishful thinking?
Here’s what’s really going on: Last fall FannieMae and FreddieMac, along with some of the bigger private mortgage banks, declared a moratorium on new foreclosures.
So for four months, homes that would have been foreclosed on sat on the sidelines of the real estate market.
And for those same four months, inventories of already-foreclosed homes declined. In March of 2009, for example, a total of 7,621 listed homes were sold in the Phoenix area, of which 5,066 — two thirds! — were lender-owned homes.
That sounds good doesn’t it? Even better, as I write this, only 7,607 lender-owned homes are listed as being Active in the MLS database. That’s just a month-and-a-half’s supply. Happy days are here again!
Not quite. That Fannie/Freddie moratorium on new foreclosures ended on April 1st. In the first three weeks of April, there were 2,460 new lender-owned listings. And there are still two years of foreclosures in the pipeline.
What we’re seeing is a Fool’s Gold Rush. The perceived shortage of housing is an illusion, an artifact of a normal number of buyers competing for an inventory that seems to be declining rapidly. It isn’t. Instead, even now the inventory of lender-owned homes is surging.
If you need to move, you need to move, and interest rates are amazingly low. If you want to bite the bullet and move up, now might be a good time.
But even if we see a month or two of stable or even rising prices, there is an echo-bust in our future as buyers catch on to the artificial nature of our illusory housing shortage.
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John Prescott says:
Greg:
In the Northeast, no one seems to be feeling an urge to rush out and buy. But…and it’s a big but, we’re seeing a deluge of multiple offers on listings at certain price points. Inventory is still relatively limited. The high end is lagging in greater Boston, but homes in the $350k – $750k range are moving quickly if they’re in good condition and priced realistically. Buyers expectations are mixed. They keep reading about bargain basement deals, but in this neck of the woods those are very few and far between. So these folks are discouraged. But rather than worrying about inventory shortages, pent up demand and life changes are causing some of the market gridlock to thaw.
– BostonKayakGuy
http://www.bostonkayakguy.wordpress.com
April 25, 2009 — 4:21 pm