Burning Down the House

Purchases of single family homes rose for the first time in almost a year. And the number might be understated according to David Greenlaw of Morgan Stanley:

We believe the resale and inventory figures may be slightly understated as a result of the recent rise in foreclosure activity. The NAR’s data include all sales involving a member agent. Anecdotal reports indicate that real estate agents take part in most foreclosure sales but, in some instances, a bank or other entity will deal directly with the buyer and no agent is involved. In these cases, the sale is unlikely to be reported. Real Time Economics

That it the first good news in many months.  If you are a potential buyer, anyhow. Prices are going to drop, and affordability should improve in the months ahead. A bottom looms out there, somewhere through the billowing smoke.

Eventually, sellers will end their denial and realize that if they want to unload their homes, they will have to cut prices even more. With mortgage rates low, declining prices should bring in more buyers. I expect sales to bottom over the next few months, though prices are likely to continue falling for quite some time. Naroff Economic Advisors

Of course, do not underestimate the creativity of Americans to solve the inventory overhang with creative measures. The supply/demand imbalance will quickly come into line if people begin to take matters into their own hands, via a Molotov cocktail.

Economists React: Some Hope for Home Sales?
Real Time Economics
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

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