Apparently Barclays does not believe that the shadow inventory (that inventory lurking on lender balance sheets) will not have as large an effect as expected by other analysts. Yeah, right.
I wrote an article recently using Apple IPads as an example. Look for it here because it will give you a little bit of perspective.
There is no way that you can have an influx of widgets that will not affect prices. The more choice there is, the more motivated the sellers to move their widgets. It does not matter what your widget is.
Barclays is basing their optimism on a count of 2.5 million homes that are in shadow inventories. Unfortunately, there are closer to 7 million homes in inventory and another 2.9 million in “always late, always pays” status.
These are the mortgages most likely to default statistically in the future. I personally do not see how the injection of 2.5 million homes will not affect pricing. I think it is impossible.
I think that we are in for a decline in values in 2012 with appreciation beginning in 2013. Unless the Federal Reserve continues to debase the currency and the dollar is completely obliterated.
If that happens, the value of your home is the last thing that you will worry about. At that point you will be concerned about if you will be eating from day to day.
Don’t think it cannot happen. It has happened to every fiat currency in history. The actions that precipitated the fall of each currency are being duplicated by the Federal Reserve, right now.
I am not kidding, it’s true. The only exception is the Japanese Yen and the QE measures taken by BOJ from 2002 through 2007.
There is no consensus among economists as to the actual affect QE had on the Japanese economy. That is no surprise. Economists never agree on anything.
But there are variables in play in the US economy that were not present in the Japanese economy. We will simply have to wait and see.
But I do not believe Barclays has this one right, and I would bet a steak dinner at Morton’s that home prices decline in 2012 when the shadow inventory finally see the light of day.
Appraisal Source is a New York based residential real estate appraisal firm. They can be of service to you if you need a real estate appraisal in Long Island or in New York City.
Here’s the original article…Barclays: Housing may not be as bad as some believe