Without a doubt the market is clearing out excess inventory albeit at a slow pace. We can look at markets even here in SoCal where short sales dominate the sales activity and are being priced to move. Yet you have those that are underwater (1 out of 3 in California with a mortgage) who simply sit in their homes continuing to pay their mortgage on their inflated asset. It is amazing the length of time that distressed sales have made up over half of all sales. I was digging through my data and found that for SoCal, since the summer of 2008 distressed sales (foreclosure resales and short sales) have made up roughly 50 percent of all sales each and every month. Four years where troubled properties have been the majority of the sales market.
You can even see that vacant homes for sale across the nation are being worked through the system:
*Vacant homes for sale
As we work through the excess inventory we are seeing some action with housing starts:
As many of you are fully aware, location does matter in real estate and single family housing starts for California have not improved:
So you likely can take away from this that nationwide homes are moving at a brisker pace to the point where home builders are actually going back into the market. In California with a big backlog of shadow inventory and inflated prices relative to incomes, home builders are largely absent from the single-family market.
The contradictory nature of our housing market – Investors skew down payment statistics. Four years of home sales in SoCal dominated by distressed properties. The over reliance on real estate for wealth. » Dr. Housing Bubble Blog
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