No, socratt, I don’t think it’s just you. I feel like Alice a bit myself these days, wondering what’s real and what’s illusion.
There certainly appears to be some kind of “plot” going on, but I’m hazy as to what its ultimate goal is. One way of viewing it puts together a number of the factors (some rumored) which are in play:
1) Loads of houses being pried out of private, single-person hands via the foreclosure crisis.
2) Indeterminate, large numbers of these foreclosures are not coming onto the market. Is it because of the legislated delays last fall/winter? Or is it because the banks are selling them in blocs to “investors” (rumored)?
3) If these mysterious “investors” don’t have to put much down on these houses, can they rent them out and still have positive cash flow?
4) There was a column by a guy in the Atlantic, I’m sorry I don’t remember his name and the date exactly, but I believe it was this March. He claimed that unemployment was highest in the areas where homeownership was highest, and so it would be better for peoples’ employment prospects and flexibility if they rented! (I wrote and pointed out to him that this is a dead-end street when you are retired on a fixed income and rent keeps going up.)
So is this some kind of tops-down plot to reduce Americans’ homeownership, turning us into a nation of renters who can be charged whatever the market will bear (and then some)?
OK, setting aside the tinfoil, I think another factor in the real estate market being “so hot” in some areas is simply that there is, indeed, loads of pent-up demand out there. Lots of people (like me) desperately want to have a place of their own, instead of renting. However, they can only go for the ones they can afford so the areas that dropped down into the realms of affordability are now hopping. That’s my take.
Or maybe the reason the banks are clinging to the NODs like grim death is simply that if they let them blow up, they blow big holes in the banks’ balance sheets. Depending on the (actual, not Turner-rumored) state of said balance sheets, the banks may not be able to afford much more damage like that.
If this latter theory is correct, then what if the government were to pass some legislation that somehow let the banks have a one-time writedown of these houses, allowing them to mark-to-market and sell them without having to take the losses? I predict two things would happen:
1) Market prices would drop off a cliff and
2) Oodles of houses would suddenly appear. It would be a helicopter-drop of houses (fine by me).
