Foreclosure prevention policies and government legislation are artificially distorting supply and demand equilibrium in the housing market. Because banks are allowing delinquent borrowers to remain in their homes (+120 days), the actual amount of existing homes inventory is uncertain. [/quote]
Ya think? 120 day? I’ve seen places working its way through the system 2 years later. Please. IF you get a notice of default, it’s like a joke.
[quote] From an economic perspective (opportunity cost), it is much more efficient for a bank to allow the homeowner continue to occupy the property, this way it is kept in a condition that allows for faster liquidation at a future date. This gives the bank it’s best shot at recovering lost principle, it’s certaintly a better option than sending the property to the auction block. Given the lack of qualified demand in the housing market, banks will likely continue to hold inventory until market demand is more accommodating of new supply. The question is, when will demand be healthy enough (qualified and willing) to support an influx of “shadow inventory”? [/quote]
Good question. When? Will banks start giving away money to dead people again? Will someone working as a cashier at McDonald’s be making 100k?
[quote] One has to assume bank inventory is only going to swell (and FN and FRE’s). HAMP will only be so successful. Only 116,297 of an attempted 1,269,937 HAMP loan mods have been made permanent so far. Even then, 57.4% of those 116,297 permanent mods…were made to unemployed or underemployed borrowers.
I suppose everything could turn around much faster than forecast if the labor market takes a drastic turn for the better. My argument against that is: record levels of productivity, company investments in technology to improve process flows, and a decline in education spending by state and local governments. The jobs that will be created will require “learned” laborers. If our country can’t meet the education and experience characteristics of labor demand, the government will be doing a ton of social spending via unemployment benefits for many years to come.
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I agree w/that. See my previous comments. Need good paying jobs. In order to have good paying jobs, people need to be trained/educated. I’d rather teach then to fish than give them fish.
