US Housing Market GlutApparently, there are about 1 million homes sitting on the market in the US right now. In an article on CNNMoney, economist David Rosenberg of Merrill Lynch says that another downturn could be imminent. With such a large inventory of homes, combined with affordability at all time lows, the trouble is far from over.
While most mainstream analysts are not talking housing bubble, there is increased worry that a bad downturn in the housing market now could have reprocussions on the wider economy.
This report is hot on the heels of an article on January 30th, which cited that virtually every major US housing market had experienced a drop in home prices in the month of November. Only the northwest bucked the trend, with Seattle and Portland still seeing double digit growth in home value.
The long run of economic growth has spurred people to purchase homes when they shouldn't have. There are times when it's best to wait before hopping on the homeowners bandwagon. While it's true that homeownership wins out in the end and is generally the best investment for the majority of people, it's also true that you have to be able to weather the storms in the meantime.
The market is still pretty shaky, despite some hopeful thinking on the part of many analysts. The increase in predatory lending practices are an indication that some lenders are trying to stave off problems by extracting more revenue now. High foreclosures indicate that many of these loans are at risk. Lenders are dropping out of the market.
Now, we have a glut of houses on the market. It would seem to me that the ride could be rough for the next couple of years at minimum; it could be a full recession if fundamentals under the surface are as bad as they think over at Housing Doom. I've still got my eye on the Implode-O-Meter; they now have the list of defunct lenders at 20.
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