FED: Why Are Housing Inventories Low?

[no_such_reality]

[quote=The-Shoveler]It’s not about housing or stocks, it’s about local municipalities Tax base and retirement pension funds that are reliant on stocks and housing.

If either go bust anytime in the next few years,

local municipalities will be dropping like flies.[/quote]

That boogeyman has one driver. Interest rates. But that really only affects the for sale market.

As interest rates go up, like we’ve seen over the last several months, counter-intuitively, housing prices will actually rise. For the same reason that they rose in the last year. Lack of inventory.

The bubble-bust had the effect of largely pricing people in. As in, stuck in their house. So sans banks finally actually starting to foreclose again, there will be no collapse of housing prices.

While the masses could find someone to buy their house and move up to a more affordable better house, the vast majority won’t because they won’t be able to stomach ‘giving it away’.

[spdrun]

And what makes you think that banks won’t start to foreclose? The best explanation I’ve heard is that “The Homeowners’ Bill of Rights Makes CA a judicial state in all but name.” Look at NJ and NY — the foreclosures delayed by 2-3 years by courts are starting to enter the market. We have 2x the inventory on Homepath as this spring, a whole lot of auctions as well.

Secondly, people move. If they’re underwater and can rent the house for more than expenses, all well and good. If not, and they can’t take the extra monthly expense, short-sale, here we come, wheeeeee….. Besides, not everyone wants (or is cut out) to be a landlord.

[SK in CV]

[quote=spdrun]And what makes you think that banks won’t start to foreclose? The best explanation I’ve heard is that “The Homeowners’ Bill of Rights Makes CA a judicial state in all but name.” [/quote]

Which clause in the legislation could reasonably cause any extended delay? Whiney ass lenders. That excuse makes no sense at all.

[spdrun]

For one thing, they can’t foreclose when an application for a loan mod has been submitted, and they’re required to try to modify.

Betting that the borrowers can tie things up in the “loan mod” stage a long time, and with no threat of foreclosure to push them to cooperate with the bank, they can live basically for free while the mod is in process.

For another, the “single point of contact” rule may require structural changes in the lending departments of the big banks, and those take time.

This is unlike in NJ where it takes a while for foreclosure cases to make it to court, but once they do, if the judge sees a history of non-payment, he’ll allow the sheriff’s sale to go ahead. Attempted modification or not.

[SK in CV]

[quote=spdrun]For one thing, they can’t foreclose when an application for a loan mod has been submitted, and they’re required to try to modify.

Betting that the borrowers can tie things up in the “loan mod” stage a long time, and with no threat of foreclosure to push them to cooperate with the bank, they can live basically for free while the mod is in process.

For another, the “single point of contact” rule may require structural changes in the lending departments of the big banks, and those take time.

This is unlike in NJ where it takes a while for foreclosure cases to make it to court, but once they do, if the judge sees a history of non-payment, he’ll allow the sheriff’s sale to go ahead. Attempted modification or not.[/quote]

Bunch of crap. They’re required to review a loan mod app. If the borrower doesn’t qualify, they can foreclose, same as they could before the law. They can’t foreclose while they’re negotiating a loan mod. They have to have their paperwork in order. A single point of contact makes sense, it saves money for the lender.

Lenders have abused borrowers for years without recourse, these tiny little hoops make sense for everyone. And if it ever actually delayed foreclosures, that should have no effect now that the law has been in effect for so long.

[spdrun]

The law has been in effect for less than a year. Big banks are slow beasts to change.

Why should they be “required” to review anything other than whether the owner is making payments? A loan mod should exist as an option only as a courtesy, and should only be used in cases of genuine hardship (illness, death/illness in the family, basically).

“Loss of home value due to market conditions” or even an episode of unemployment (you should have some savings) shouldn’t be enough reason for a modification. I know people like that — bought a house with cash back on closing, 0% down in 2007, house’s value went down 50%, lost their job (temporarily) and went whinging to the bank for a loan mod. Successfully.

Those kinds of people don’t deserve to “own” a home.

[Jazzman]

[quote=CA renter]Agree with Jazzman, but think the investor-speculators have had a HUGE impact all across the country. When the Fed stomps on interest rates they way they have over the past 5+ (!!!) years, money will end up being squeezed into everything else. Since housing was seen as distressed, that’s where the speculative money went. It remains to be seen how and when (and if!) this unwinds.[/quote]
I think it will depend on how important the housing market is to a recovery. Can it create jobs, or will those jobs come from other industries? Maybe the jobs that were lost are permanently gone; either because the bubble created them, or they’re now in China. In respect of housing, any lift that was caused by speculative investing can’t, by its nature, be permanent. I suspect prices will soon fall in places where they have risen too sharply.

[Jazzman]

[quote=spdrun]

And yes, I know that stocks =/= housing, but the two are intimately related, at least emotionally.[/quote]

Pardon my ignorance, but didn’t one try to take over where the other, with all its failings, left off. If there is a difference, it is that housing is simpler to understand.

[spdrun]

Uh, what?

One is a type of physical asset, the other is a share in a company.

[SD Squatter]

Is there an easy way to check the number of houses for rent in San Diego at any given time? It would be interesting to see the for-sale vs for-rent ratio over time.

Getting the size of the for-sale inventory is the easy part.

[Jazzman]

[quote=spdrun]Uh, what?

One is a type of physical asset, the other is a share in a company.[/quote]
You’re taking me too literally.

[Author]

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