I came across this little ditty on Yahoo News.
It's quite sobering actually.
A recent report stated that sales of new homes hit a record low in February. Then last week there was news that 19 of the 20 largest metro areas tracked by the Standard & Poor's/Case-Shiller home price index saw a price slump in January as well. There is yet another housing data report on "shadow inventory" (that tracks foreclosed and distressed homes that have yet to hit the markets) which suggests that the housing market is going to be in a slump for quite a while.
Despite any so-called "green shoots" - (i.e. finger's crossed and non-denominational prayer for hopeful signs in the economy) there is just an incredible backlog of homes currently on the market along with homes that might come on the market soon.
The yahoo report states:
In terms of homes for sale, we have three inventory tracks to keep an eye on:CoreLogic's analysis on state-level data shows that the states with the most distressed housing inventory are New Jersey, Illinois, Maryland, and Florida, while those with the least distressed inventory are North Dakota, Alaska, Wyoming, and Montana.
* The official inventory: 3.5 million homes. The National Association of Realtors says the current inventory of existing homes that are listed for sale would take 8.6 months to work down at the current sales pace. In "normal" times, the inventory backlog is more in the vicinity of six months.
* The unofficial shadow inventory: 1.8 million homes. According to research firm CoreLogic, there's another 1.8 million homes sitting in shadow inventory. These are homes that don't yet show up in NAR's Multiple Listing Service as being for sale, but that are likely to hit the market at some point. They include homes that banks have already foreclosed on but have yet to put up for sale, homes that are somewhere in the foreclosure process, and homes in which owners are at least 90 days late on their mortgage payments. CoreLogic estimates that those 1.8 million homes represents an additional 9 months of potential supply given the pace of how bank-owned property and pending foreclosures make their way to market.
* The severely underwater inventory: 2 million. CoreLogic uses this category to refer to homeowners that are at least 50 percent underwater on their mortgages. Now there's nothing that says homeowners with negative equity will in fact walk away from their mortgages. But it's reasonable to presume that short of a quick turnaround in home values or a settlement between the state attorneys general and lenders that leads to substantial loan modifications, a significant chunk of these homes will end up on the market in the coming months or years.
Add it all up, and NAR's 8.6 month official backlog triples to about two years or so.
Pretty much if the "shadow inventory" of homes in your area is high - then home values in your area won't be rebounding anytime soon.
The fact is that many markets just have to absorb too many homes right now. If you are a buyer - you can take your time to pick and choose. If you are a seller - or a potential seller - well, you may have a problem on your hands.
Related: States with the strongest and weakest home equity
HIGHEST NEGATIVE EQUITY STATES
* Nevada: 68 percent of all mortgages are underwater
* Arizona: 50 percent
* Florida: 46 percent
* Michigan: 38 percent
* California: 33 percent
With a high concentration of homeowners underwater in these states, values will likely remain under pressure.
LOWEST NEGATIVE EQUITY STATES
* Oklahoma 5.8 percent of all mortgages are underwater
* New York 7.1 percent
* Pennsylvania: 7.3 percent
* North Dakota 7.4 percent
* Montana 7.7 percent
With only a small portion of the market underwater, these states have brighter prospects for home values and for normal (non-foreclosure) sales.
Looks like North Dakota may be a shining example for us all...