I have a lot of respect for the opinions expressed by nationally syndicated mortgage broker Lou Barnes.
Here’s his current take on the state of the real estate market and the effect of the foreclosure explosion on our national economy.
Home resales run a tad over 6 million annually, plus another 1 million new-builds. Re-sellers still want to re-sell, and builders, desperate to unload land and to maintain survival volume, are still building at undercut prices. Demand is off (un-affordability and anxiety), but a new seller has arrived: first-half ’07 foreclosure filings just short of 1 million. Pull-through from filing to foreclosure is unpredictable, but it looks as though re-sellers and builders will soon be joined by another million foreclosure re-sellers (or two, or three…). That’s market saturation, not clearing.
We are going to get spillover into GDP. Book it. And we’re going to see a serial credit panic. However, the disaster mongers are mistaken. Credit losses are distributed globally, and there is great long-term strength in housing (population growth, land scarcity, wealth…). The forecast here continues to be for a long period of flat prices in the Bubble Zones, but vastly more foreclosure damage from flat prices than previously modeled or imagined, the Great Hangover from the ’01-’06 Mortgage Credit Party.
Well, that’s certainly a possibility.
I’m thinking things will be less severe, but that’s just my opinion.
It’s not like I’m a professor or anything.
Foreclosure damage to be worse than expected – By Lou Barnes, Inman News, by way of The Boston Globe
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