Monday, August 2, 2010

I wanted to share this post from an email I received today from Chris McLaughlin, an attorney in Florida who specializes in short sales. Since I am in Denver, it was particularly interesting that Altos Research considers the Denver market to be unstable. We are definitely seeing a slow down in the number of buyers in the market.

"Real estate data provider Altos Research is taking a very bearish outlook on the housing market. The California-based company says that ominous shadow inventory of distressed properties hanging over the industry will lock home prices into a downward trajectory for the remainder of this year, with property values
starting out 2011 even lower than they were in 2009. Market trends charted by Altos show that inventory levels are indeed moving higher and the influx of shadow inventory is beginning to show in the market. The company’s VP of data analytics, Scott Sambucci, described a noticeable shift in housing supply dynamics in a Webinar earlier this week, in what he called “a sign of market weakness.”

Since January, and particularly post-tax credit stimulus, Altos has tracked a rapid divergence in inventory numbers vs. listings sold and absorbed. This, Sambucci explained, means more inventory is coming onto the market, with less inventory leaving. As a result, he says, we’re going to see an extreme inventory overhang going into 2011. Add to that the fact that the pool of viable buyers out there is shrinking – thanks to tight credit, a declining homeownership rate, and more and more consumers being locked out of the market after a foreclosure – and you’ve got an equation that’s right in line with Altos’ bearish outlook. Following the rudimentary rules of supply and demand, more inventory with fewer takers equals lower prices. Altos Research provided its assessment of the most stable housing markets…and the markets that it considers to be on shaky ground. The San Francisco metro area topped the stable list, along with Las Vegas and Washington, D.C. Unstable metros included Minneapolis, Denver, Chicago, and Phoenix."

What do you think? How have your markets been behaving?

Leave me a note and share what you're seeing!

Christy Mellott


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