Dark Forces Manipulate U.S. Housing


Dark Forces Manipulate U.S. Housing

Dark Forces Manipulate U.S. Housing

Wait until all the robo-signed documents that were put on hold eventually make it out to the market and play catch up. Also thanks to the elections for pretending home values were on a rise…but then again they also took plenty of REO’s off the market.

The Real Estate market is RIGGED!

Seeking Alpha-

Pater Tenebrarum put it bluntly in his Seeing Alpha article, “The real estate market is totally out of whack and predictability is now a plaything of unpredictable intervention.” He went on to examine whether we are in another bubble. His articles rang true based on my experiences as a Las Vegas real estate investor.

The Las Vegas housing market appears to be in great shape. According to the Greater Las Vegas Realtors Association, the median price in October 2012 was $140,000, up 15.7% from a year ago. Furthermore, homes are flying off the shelves with 55% sold within 30 days of being on the market, and 14.6% sold within 31-60 days. However, there are two significant indicators that tell us that the Las Vegas real estate market is not in good health:

  • Absorption Rate. 2012 price increases are a direct result of an artificially generated supply-demand imbalance, which results from government intervention. A balanced market’s absorption rate is typically between 5-7 months, however, in some areas the Las Vegas absorption rate is below one month. It is a seller’s market with multiple bids on most properties pushing up prices.
  • Pending Supply. A healthy market does not have more than one month of pending supply. This pending supply, or shadow inventory, consists of distressed properties not currently listed that are 90 days or more delinquent, those in foreclosure and real estate owned by lenders (REOs). With over two thirds of homeowners upside down on their mortgage, and as many as 75,000 homeowners more than 30 days late on their loans it is reasonable to conclude that there is well over a year of pending supply – more than 12 times that of a healthy market. This is based on the assumption that 36,000 homes is equivalent to one’s year’s supply since Las Vegas has been absorbing an average of just over 3,000 homes a month since 2009.

These two indicators are linked: as the pending supply increases the rate at which it comes to market, the absorption rate will increase and constrained supply will be removed as an upward pressure on prices. So the question on the minds of cautious investors is when will the supply increase, and will it lead to lower prices?


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One Response to “Dark Forces Manipulate U.S. Housing”

  1. Sarah says:

    This is an easy one for the folk who exist on a certain lower socio-economic level. House prices are too high. The desire for housing as a place to bathe, sleep, prepare meals and isn’t context for policy makers or their moneyed lobbyists. Ergo, plenty of housing stock available but the masses are inadequately, unaffordably housed. Of course, housing in the literal sense isn’t the motivation for operations of the FIRE sector. Profit seeking adventures end up burning someone, their greed is always reduced to a mindless quip “Capitalism ain’t pretty”. I say fraud, you say capitalism, let’s call the whole thing off.


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