Sunday, January 30, 2011

This is great news for all those new Obamaville developments popping up around the country...


By Pat Shannan

A recent Morgan Stanley finance report cited by financial analyst Jeff Adams warns that a huge “shadow inventory” of homes with delinquent mortgages, which has yet to move through the foreclosure process, would take 47 months to clear at the current market sales rate.

While realtors and bankers claim—or at least want the American people to believe—that the real estate market is “turning around,” Adams reports that Americans are not being told of this “shadow inventory” amid the rising tide of residential foreclosures that continues to paralyze prices and hamper housing market recovery. It appears this second foreclosure wave is about to arrive.

More than 10 percent of all mortgage borrowers in the U.S. are seriously delinquent, and the shadow inventory riding that new tidal wave totals around 8 million. While there are no exact numbers on the extent of the nation’s growing shadow inventory, Morgan Stanley is telling its investors to slow down and not jump too soon, Adams adds.

People in Florida and California, particularly, have watched helplessly as the real estate crisis has pushed their home values to as little as 25 percent of what they paid for them less than a decade ago.

The report continued, “Given the sheer number of potential homes for sale and the weak pace at which demand is trending, the bottom of the housing market may last another three to four years, during which annual appreciation may reach only as high as inflation or income growth, meaning real asset values will remain unchanged or lower throughout this period.”

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