Just watching bloomberg and listening to finacial shows over the weekend. Every expert very positive on real estate. What happenend to the shadow inventory? I know the market is regional, jeez I thought we had 6,12 ,24 months of forcl/shrt sales on the books. Is this just a reaction to last weeks market run up? Is the economy finally turning the corner for housing. This would be a good sign for all sectors.
Good question. My guess is that, as is usually the case, there is a confluence of factors that have gradually been sneaking up on us.
A few examples might be things like the fact that warehoused residential properties don’t “keep” well. The longer they’re vacant, the worse they are for it and the more it costs to rehabilitate them to the point where they can compete with new construction.
Of course the fact that mortgage rates are the lowest in living memory helps except that’s not really news. I think behind the scenes what’s also happened is that underwriting standards have gradually started to go back to something akin to what would be considered “normal” - as compared to a few years ago when you needed god to co-sign your loan.
There’s also the pent-up demand factor and the fact that people have had several years to suck it up and get used to the idea that if they wanted a house they were going to have to come up with at least 20% down - 20% in real cash money, not 20% on credit cards and back-dated checks.
And maybe one more consideration, as perverse as it is, is the fact that no matter how bad people may have gotten fucked by the real estate bubble, that was still probably a dream date compared to the way their other assets were probably gang-raped.