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Do current housing inventory levels reflect the true market?

June 3, 2009

Analysis of:Home prices slide 14% | money.cnn.com

Now that the Fed's are involved in the mortgage crisis, the inventory of bank owned properties on the market has steadily declined over the last several months. Recent declines in REO assignments serves to reinforce the belief that inventory control has been orchestrated by our government. With supplies steadily in decline the data would suggest many markets have reach healthy levels of months of listing inventories. The economic motivation is supported because banks don't have to report the flow of red ink on their books propping up their stock value. Buyer's come back into the market thinking the bottom has been reached instead of waiting for further declines. Sadly there's little confindence inventory control can be sustained unless lenders and the US government are willing to become landlords, the back log of foreclosures will eventually come to market. False bottoms eventually give way to the ground floor!

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