A record 17.9 million U.S. homes stood empty in the third quarter as lenders took possession of a growing number of properties in foreclosure.Let's stop right there. Did you catch it?
The figure is a 7.8 percent gain from a year ago, when 16.6 million properties were vacant, the U.S. Census Bureau said in a report today. About 2.07 million empty homes were for sale, compared with 1.94 million a year earlier, the report said.
New foreclosures have risen to a record, led by defaults in adjustable-rate loans to people with tainted or limited credit histories, according to the Mortgage Bankers Association. Home- price declines and tougher lending standards are making it difficult for owners who fall behind in mortgage payments to sell or refinance into better loans.
The U.S. homeownership rate fell for the fourth consecutive quarter to 68.1 percent, seasonally adjusted, from 68.9 percent a year ago, the report said.
- A record 17.9 million U.S. homes stood empty in the third quarter.
- A mere 2.07 million empty homes were for sale.
There are 15.83 million vacant homes just sitting there. How long can that last?
That is a huge potential supply of homes that for some reason or other is not listed yet. I suspect many of those are REOs (real estate owned ) by banks and mortgage companies like Countrywide. Every passing month those REOs sit on the books waiting for higher prices is lost property taxes, upkeep costs, and balance sheet impairment.
Every month the figures get worse. For example, Countrywide has 13,000+- REOs for sale, but they also have 82,000 foreclosures. That alone represents significant pent up supply as those foreclosures become REOs. See Option Arm & REO Problems At Countrywide for more information.
Add to that pent up supply are those with a second home who want to sell it as soon as they can "get even" on it. In the meantime those people are "content" to rent. That contentment will turn to sour milk given enough time, or any problems necessitating a sale sooner rather than later.
This kind of supply can last for years. In fact, as home prices sink, this kind of supply can grow as people become disgusted with the idea that "real estate prices always goes up".
The siren song from Realtors is that now is the best time to buy ever. Straight up it's easy to see that is a lie. The best time to buy was 10 or more years ago and the best time to sell was in 2005. It's still a long way down from here. Rising inventory, falling prices, and pent up supply should be proof enough.
Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/
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