Where Is Housing Going?
Housing is potentially about to suffer a slowdown in its recovery or a full-fledged double dip. The problem is that there are a few factors working against a sustained recovery in housing.
First, The Federal Reserve’s monetization of mortgage backed securities is set to end at the end of March. Most believe this will cause mortgage rates to go up since the monetization of these securities has kept rates down. Pretty straight forward here. Higher rates hurts the housing market.
As a recent Yahoo! Tech Ticker article (video below) discussed, there is a potential mass glut of supply that some call the “shadow inventory”. Basically, the official numbers of the houses for sale typically don’t factor in the millions of homes going through or about to go through the foreclosure process. The Zillow economist in the below video estimates this to be somewhere around 10 million homes! Yikes.
Put it together and housing is likely to take years to stabilize/rebound. I look at this way. The bubble grew over a period of many years, so it’s likely to require many years to unwind. I just don’t think we’re there yet. If you’re looking to buy, there’s no rush in my opinion.