More market news about short sales Courtesy of The Signal, in California. The title of this article is, “Short Sales Hamper Market”, and it’s an interesting article because it somehow backwardly blames the housing problems on Short Sales, even though we have shown over and over again that short sales are actually a mitigating factor, a partial solution, to the housing crisis.
The first point they make is that people aren’t buying homes:
Local realtors are met with a persistent problem: People just aren’t buying homes.
The problem is two-fold — there aren’t enough homes on the market, and customers are still wary to buy, local Realtor Andrew Walter said Friday.
I’m betting this is a typo. It probably should have said there are too many homes on the market. Either that, or the author is very confused, as the next sentence goes on to describe how the number of houses on the market have drastically increased:
More than 1,000 homes were on the market in July, up nearly 40 percent over last year, according to a report released by the Southland Regional Association of Realtors [but only] 244 homes changed hands, the report stated.
That’s because the majority of the houses and condominiums on the market were caught up in the lengthy, labyrinthine short-sale process.
Last month, 176 homes were sold, down 25 percent from the same month last year. Another 68 condominiums were sold, a 23-percent drop.
I find it interesting that this article blames the short sale process for flooding the market with houses. The houses and other properties are flooding the market for numerous reasons, but resulting short sales are a downstream effect of the market, not an upstream causation.
We’ve posted some analysis here, but even the HUD’s report itself claims differently. The flood of houses is due to low demand and high inventory. It’s like when Gucci makes too many bags, so they ship them off to the Outlet to get rid of them at bargain prices. The inventory is just too high.
Remember, building a house takes time. Housing starts were outpacing demand, and even when the market started to come down on housing, a lot of developments were still in progress and were finished, even though the buyers had vaporized. It will take time, perhaps years, for construction starts to begin again and for demand to “catch up” to supply.
“These short sales are such a huge, cumbersome, involved, long-term project,” Walter said. “A lot of these homes sit there, and they look like they’re available, or look like they’re pending, and they just go on forever. I’ve got one I’ve been working on for a year.”
“There’s no sense of urgency because people are not quite sure where this is going. They’re like, ‘Well, we’ll see what happens.’”
Again, short sales are challenging (that is why Short Sale Artisan is such a useful tool!). But if the house was not in a pending short sale, it would be in a pending foreclosure. It’s not like the houses would turn around quicker if they were going to foreclosure!
What are your thoughts on the article? Are Short Sales are a part of the problem? Our position is: Quite the contrary!
