Donâ€™t even think about buying a houseÂ for the next year or so. Not unless you can afford to flush tens of thousands of dollars down the toilet, because thatâ€™s what youâ€™ll be doing.
Hereâ€™s whatâ€™s happening. As everyone knows,Â housing is driven by the same supply-demand dynamics as every other market. The problem is, the banksters have gamed the system so it looks like thereâ€™s less inventory then there really is, so prices are higher than they should be. By keeping millions of homes off the market the banks are protecting themselves from bigger losses. Unfortunately,Â itâ€™sÂ the buyer who ends upÂ being the victim in this market-rigging scam.
Now take a look at this goofyÂ article in Mondayâ€™s Wall Street Journal and Iâ€™ll try toÂ explain whatâ€™s really going on:
â€œThe housing market, which has struggled with an oversupply of homes for years, is facing a new problem: a lack of attractive inventory.
There were more than 2.19 million homes listed for sale at the end of September, down 20% from a year earlier, according to a new report from the real-estate websiteÂ Realtor.com. That is the lowest level since the company began its count in 2007.
The report is the latest sign of how the U.S. housing market canâ€™t seem to catch a break. While falling inventories are typically a sign of health, because reduced competition can boost prices, that isnâ€™t the case right now.
Instead, real-estate agents say, people are pulling their homes off the market rather than try to sell them at todayâ€™s discounted prices. At the same time, banks have been more slowly moving to take back properties through foreclosure ever since processing irregularities surfaced last fall, temporarily reducing the supply of foreclosed properties. The shrinking supply isnâ€™t driving up prices because demand is soft.
Yet there is still a substantial â€œshadowâ€ supply of foreclosures and other distressed homes, estimated to be more than one million, that is likely to stream onto the market in the coming years. The pent-up supply is another constraint on any of the price gains that might normally occur when supply falls.â€ (â€œSlim Pickings Are Latest Headache for Home Salesâ€, Wall Street Journal)
Excuse me? Shadow inventory is around â€œone millionâ€ homes? Youâ€™ve got to be kidding?
Thereâ€™s so much wrong with this article, itâ€™s hard to know where to begin. First of all, the reason why people arenâ€™t scarfing up homes at current prices has nothing to do with the â€œlack of attractive inventoryâ€. Thatâ€™s a load of malarkey. Itâ€™s because they no longer have confidence in the system. And why would they? After all, theyâ€™ve just seen their family and friends just get reamed in the biggest mortgage fraud scam in history. Are they supposed to go rushing back in to the market with money-in-hand so they can get fleeced too? Not likely. Besides, owning a house isnâ€™t what it used to be. Not by a long shot. It used to be the cornerstone of the American dream and entreâ€™ into the middle class. No more. Owning a house today means that one is shackled to a sinking asset that limits oneâ€™s options and mobility. Letâ€™s face it, that 5-bedroom McMansion with the marble countertops is the albatross that keeps people toiling-away in the cube-farms until the day they get carted off to Potterâ€™s Field. A 30-year mortgage is a 30-year prison sentence.
Also, the whole â€œfalling inventoriesâ€ story is pure bunkum. The housing backlog has mushroomed in recent years eclipsing anything in the history of the industry. The banks are just keeping homes off-market to save their own bacon. The whole thing is a joke. TheÂ only reason the charade goes on is because the government is in bed with the banksâ€“concealing the detailsâ€“so the rip off can continue without pause. Itâ€™s just moreÂ industrial-scale collusion.
Now check out thisÂ clip from an excellent report by McClatchy News:
â€œThe housing marketâ€™s ballooning shadow inventory â€” buoyed by a yearlong foreclosure slowdown â€” stands as the most menacing obstacle to the recovery of the residential real estate marketâ€¦.
A McClatchy analysis of four years of foreclosure data and thousands of property records found record-high levels of shadow inventory in several housing markets across the nation.
In the supply-and-demand-reliant real estate market, the national supply of homes is officially listed at about 3.5 million, or about nine monthsâ€™ worth; sales are on track to reach about 5 million this year. But once shadow inventory is added, that supply more than doubles, to at least 7.5 millionâ€¦..(â€œMillions of homes lurk on bank inventories, casting doubts of reboundâ€, McClatchy News)
Got that? The real supply of homes is actually â€œdoubleâ€ the amount thatâ€™s being reported. So that means that the $400,000 rambler Mr Jones is planning to buy with his hard-earned money is probably worth about, uhm, $200,000. So, Mr.Jones is basically gettingÂ bent-over by the bankers while Uncle Sam sits in the bleachers applauding. Isnâ€™t that whatâ€™s going on? And everyone wonders why public confidence is so low?
More from McClatchy:
â€œIn the aftermath of the largest home-repossession campaign in history, mortgage lenders are holding properties off the market as a matter of strategy. â€¦. a growing number of vacant homes have sat idle on banksâ€™ balance sheets for several years.
According to the data firm CoreLogic, which has one of the more conservative estimates of shadow inventory, mortgage debt outstanding in the shadow inventory is about $336 billion. Liquidating REO homes through the sales process usually leads to significant write-downs on bank balance sheets.
Wary of seeing such large losses appear in earnest on their books, lenders have been reluctant to deal with bad loans head-on, said Ira Rheingold, the executive director of the National Association of Consumer Advocates.
â€œTheyâ€™re afraid,â€ he said. â€œThey donâ€™t want to take those paper losses. Their books show that they have these assets that are worth â€˜Xâ€™ amount of money. But those values are not real.â€â€¦â€
â€œAfraid?â€ The banks are afraid?
The banks may be broke, busted, underwater, insolvent, and kaput, but â€œafraidâ€?
No, theyâ€™re not afraid. Why would they be? They have powerful friends in Washington who will bail them out whenever they get into a jam. Just look at the Fedâ€™s balance sheet; $2 trillion and rising. And every dollar spent was gifted to some shifty Wall Street bankster who got caught up in his own crooked Ponzi-swindle.
â€œThe outlook for shadow inventory has worsened considerably over the last year because of lender paperwork problems that have gummed up the foreclosure systemâ€¦.
More than a million foreclosures that were supposed to be completed this year have been pushed into the future, prolonging the housing crisis, RealtyTrac foundâ€¦.
Nationwide, there are 2.2 million homes stuck somewhere in the foreclosure process, and many of those cases have completely stalledâ€¦.
Additionally, banks arenâ€™t selling homes fast enough to justify more aggressive foreclosure filings. Even at the currently slowed pace, foreclosure starts are three times higher than foreclosure sales are, meaning that properties are being loaded onto the conveyor belt much faster than theyâ€™re being taken off.
â€œItâ€™s kind of like a pig in a python,â€ Blomquist said. â€œAs you start to see more of foreclosure sales and that inventory is cleared out, then youâ€™ll begin to see more new filings.â€ (â€œMillions of homes lurk on bank inventories, casting doubts of reboundâ€, McClatchy News)
Okay. So, housing sales have stalled, foreclosures are stacked up from here to kingdom-come, and Obama and his GOP cohorts are determined to cut public spending and shave entitlements. Doesnâ€™t that sound a bit like a deflationary spiral to you?
Bottom line: Prices have only one way to go; down, down, DOWN.
Still thinking about buying a house?
Mike WhitneyÂ lives in Washington state. He can be reached atÂ email@example.com
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