Monday, June 15, 2009

Chart theft

I stole this chart from Clusterstock. I think it shows quite well the problem we are facing with housing. It's California-specific, but the problems are national, and to some extent, global.



You can see the short term effect when the first foreclosure moratorium went into effect in September of last year. You can also see that the long-term effect of the moratorium was negligible.

Houses are being foreclosed at roughly twice the pace of sales. Are banks holding all these foreclosed houses off the market, hoping (praying) for pricing to improve before they attempt to sell them? If so, are banks disclosing this fact in their financial statements?

What if mortgage rates spike and nobody can afford to buy all Repo'd McMansions we built over the past decade at prices the banks need to get?

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