Teddy Rosevelt once said that “There are lies, damned lies, and then there are statistics.” This quote sums up the current blizzard of conflicting real estate statistics. How is one to make sense out of this mess?

 One way is to look at the shadow inventory and compare it to the number of delinquent loans. Shadow inventory is defined as loans 90 days or more past due, in foreclosure, or lender owned that are NOT listed for sale. This number is about 1.7 million. The number of LISTED homes is about 6.5 million. The shadow inventory has fallen by about 20 % within the past 12 months. In California about 47% of the homes on the market are either short sales or lender owned properties. What this means is that more home owners are listing their homes as short sales, and more short sales are selling which results in fewer lender owned properties. This process will play itself out in a few years. Homes prices will increase a few years before the lender inventory is absorbed. The most important statistic is the 94% of homeowners that are making their mortgage payments every month. Only 6% are in trouble. In California this is about 8%. This is not enough to bring the housing market crashing down, but it is enough to increase the pressure on lenders. They are under enormous pressure to add to their reserves, to cover these delinquent loans thus restricting their ability to make new loans. In any case the glass is 92% full in California.

• < Prev
• Next >