Monday, July 27, 2009

Vacancy Abounds

Despite the NAR and Real Estate cheerleaders out in force declaring the housing market has bottomed, Bloomberg reported vacancies are at generational highs.

"More than 18.7 million homes stood empty in the U.S. during the second quarter as the steepest recession in 50 years sapped demand for real estate and banks seized properties from delinquent borrowers.The number of vacant properties, including foreclosures, residences for sale and vacation homes, was little changed from 18.6 million a year earlier, the U.S. Census Bureau said in a report today. The quarterly homeownership rate was 67.3 percent, seasonally adjusted.More than 14 percent of homes were vacant in the period, the Census said."

"Home values dropped 33 percent since 2006, according to the S&P/Case-Shiller index, and the unemployment rate in June rose to the highest in almost 26 years. Tumbling home prices and rising job losses have thwarted government efforts to reverse the housing decline at the heart of the longest U.S. recession since the 1930s.There were 130.8 million homes in the U.S. in the second quarter, the Census Bureau said. In addition to the 1.9 million empty properties for sale, the report counted 4.4 million vacant homes for rent and 4.6 million seasonal properties that are only used for part of the year."

I've been telling people that there will come a time when people simply decide to walk away from their houses, and it's happening in force now. Banks don't want them back and lenders refuse to foreclose. There is a massive "shadow inventory" of these vacant or foreclosed homes that have yet to hit the market.

If you are still thinking of buying a house, make you know the risks involved and conduct the proper due diligence. The landscape is littered with knife catchers who thought they were buying the bottom for the last year.


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