Lie #5: The Housing Market Is Recovering

the number's were up due 100% only to those who took the stimulus to buy homes and houses and the financially rich who bought some cheaply discounted houses and 100% not those whose were killed off financially or those on the verge to lose their job soon! The worst is yet to come!!!!

But if it's going lower, it's recovering. Even if that 6.5% just goes down to 6.4%, that means we're recovering. It's not staying the same and it's not getting higher. A slow recovery? Yes. But this article contradicts itself.

While this article doesn't have much supporting evidence, it is correct. The housing market is not recovering. The media and short term numbers look to be sliding at a lower pace. But believe me, as I'm in the trenchs closing short sales by the hundreds, the banks have created a shortage of supply by not forecloseing and taking months to short sale. My market is San Diego. I have a multitude of clients who haven't made a payment for over a year and the bank hasn't even filed an NOD (the beginning of the foreclosure process that should happen 90 days deliquent). They are not forclosing and putting these properties back on the market to artificially decrease supply, increase demand, and increase prices.
The Gov't was urging people to modify their loans, but with less than 5% working or becoming permanent they have now urged people (and banks) to short sale. Remember that while the banks are taking 6 months to decline requests to modify their loans, the property is not listed for sale and the homeowners are not paying.
The big issue affecting the available inventory in San Diego is that all the homes are short sales with offers into the banks waiting the months and months to just get an answer. The inventory is all "pending short sale approval".
First American's report shows that 23% of the nation is underwater (70% of San Diego is underwater or within 5% of being underwater). That does not hint of recovery. Nor does the fact that 2006 was the year with the highest amount of ARM's (Adjustable Rate Mortgages) the most of those being 5 year terms.

In closing this is the statistic that will shed the brightest light on the subject. In the beggining of 2008 5.7% of homeowners with mortgages were in default. At the end of the 2nd quarter of 2009 10.2% of homeowners were in default, about double. During this time frame of beginning 2008 to end of 2nd quarter of 2009 trustee sales (foreclosures) declined by almost half. How in the world are half as many homes going to foreclosure when twice as many people are selling. Loan mod's isn't the answer. Short sales, unfortunately, are not either as the majority of my counterparts are not closing these (8% national success rate of short sales).
Tyler Brown
Trinity Homes and Investments
www.shortsalessandiego.net

Tyler,

All you say is true. But who could argue that housing will not recover? I am old enough to remember when housing was not a short term investment but rather simply a place to live. As population grew so did the demand for housing. In the seventies ordinary folks started flipping houses because they could borrow at 6% and the housing values were appreciating at 12%. Finally Paul Volker straightened that out in the early eighties with 18% loan rates. I recall that people wee saying then that housing would never come back, but as always they were wrong. The bubble once again erupted this decade.

Inventories of houses for sale are at very high levels right now and the only remedy is time. Time always bails us out of real estate problems because while in the short term we concentrate on inventory, in the end the supply of good land is limited and will eventually be a good hedge against the coming inflation we know will occurr because the money supply we are creating ensures it.

So the short answer to how do we solve this problem is this....prudent loaning practices, a return to sensible expectations by buyers as to what they can afford, and a return to the mindset that buying your home should not become a casino experience.