At this point there are so many bank-owned foreclosed homes that it would take almost nine years to clear out the housing inventory. That time frame doesn’t even begin to take into consideration the additional homes that are likely to also enter the backlog while the current inventory of foreclosed homes gets cleared out.
According to The Wall Street Journal:
“How much should we worry about a new leg down in the housing market? If the number of foreclosed homes piling up at banks is any indication, there’s ample reason for concern.
“As of March, banks had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier, according to estimates from LPS Applied Analytics. Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier.
“Based on the rate at which banks have been selling those foreclosed homes over the past few months, all that inventory, real and shadow, would take 103 months to unload. That’s nearly nine years.”
As we already know, this predicament already includes the government programs at work to artificially improve the situation. For example, the Home Affordable Modification Program, or HAMP, was shown a recent report from the Special Inspector General for the Troubled Asset Relief Program to be operating because, “supporting home prices is an explicit policy goal of the Government.” When this support slows down, and stops altogether, the foreclosed inventory could end up taking a lot longer than nine years to clear out.
See more details in The Wall Street Journal’s coverage of the 103 months it will take to clear housing inventory.
The Daily Reckoning
Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update -- which he ran from Brazil, Chile, and Puerto Rico -- as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let?s Go Publications, Harvard Student Agencies, and The Harvard Advocate.
the hampster program is yet one more reason why i have nothing but contempt for higher education….it is the brain child of the academically trained and elitist eggheads….
it is patently obvious to anyone but an f-tard that falling prices (i.e. deflation) is the solution to markets impaired by inflation….
we had the inflation, we now need deflation to clear the markets…
if the market is allowed to work without imbecilic interventions as we have had, that 9 years might even shrink….
foreclose foreclose foreclose get these houses DOWN. American needs to go bankrupt. OOPS, it already is bankrupt. What a scam.
Your house will NEVER be worth want it was in 2005/6 in your lifetime. NEVER, do you hear me, NEVER NEVER NEVER.
The loan mod is a scam. Banks pocketing the money as usual. The United States of Argentina has started.
Oh by the way,
One day in the House of Representatives a bill was taken up appropriating money for the benefit of a widow of a distinguished naval officer. Several beautiful speeches had been made in its support. Then Col. David Crockett arose, and spoke on the both nobility of charity and why it has absolutely no place within the government. Read on...
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America is a country like no other. Comprised of people from all corners of the globe, America exists solely because people chose to become Americans. But what does that mean? And how does it influence the concepts of liberty and freedom Americans feel so entitled to? Bill Bonner explains...
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Charles Hugh Smith explains that promises made in flush times cannot be kept in lean times, especially when it comes to pension plans...