Has The Housing Industry Been Optimistically Lying?
Housing has been in trouble for a few years now, and the numbers have started looking a little bit better lately. However, just as the figures from when the housing problems actually began might be fudged just a little bit, it seems that some of the latest housing figures might not really be telling the whole story either.
Let’s take a look at the first part. Many people believe the housing industry crash began around 2006, possibly 2007. In reality, the housing industry crash began much earlier, probably when subprime mortgages came about in the 1990’s. Suddenly more people were qualifying for houses that they couldn’t afford, and home builders went crazy and started building a lot more houses which also began inflating the price of homes.
Now we’re at a point in time where in many states homes have lost a lot of their value, which they probably never really had, and homes are selling at drastically reduced rates. Yet there are many homes not on the market as banks are trying to artificially keep prices up by not releasing all the homes that are available. Add to that the fact that banks and lenders have also tightened standards and lengthened the time it takes for someone to find out whether they’ve been approved for a loan or not and you have an industry that’s imploding on itself and certainly not looking like it’s ready to break out of its malaise.
I’m not the only one saying this. The National Association of Realtors said that existing home sales fell almost 10% in February and that the sale of new homes fell in February to levels that haven’t been seen in almost 50 years. This news is bad enough, but when you add in the fact that there are still an extremely high number of foreclosures and that unemployment is still very high (another number that’s probably higher than reported), it’s not surprising that the housing industry’s problems just might extend longer than anyone could have imagined. To say that home prices are up and try to talk about the spark in new homes sales signaling an end to the crisis is stretching the truth “just a little bit”.
And I say this as a homeowner whose house is increased in worth supposedly almost 50% from what I purchased it at, for no discernible reason except for a townhomes community that was built about 1/2 a mile from me, whose home prices started at that 50% mark and sold out within weeks. That’s not the best way to assess what housing is worth, whether it benefits me or not.