Fannie's Head in the Sand?
Chew on this recent bit of housing news I picked up from shortsaledailynews.com. Last week, The National Association of Home Builders (NAHB) boldly predicted a 21% increase in housing starts for 2011. That would still be a significant decrease from where the numbers were just five years ago. They forecast 575,000 single family home starts this year alone. This apparent optimism is based on a steadily improving job market and overall economy. While this may indeed be occurring in some sectors and markets, there is still a tremendous number of foreclosures out there and plenty more around the corner (shadow inventory). So I disagree with the NAHB and wonder if they are just blowing smoke to cheer up their own constituents. There’s simply no way to have a serious rebound without acknowledging the ‘preforeclosure pipeline’.
Even Fannie Mae is jumping on the bandwagon, predicting over 700,000 new housing starts for 2011! Do I hear 750? 800? Where does it stop? There’s good reason to believe that there will be more houses lost to foreclosure this year than there were in 2010, which is unbelievable to even consider given how bad a year it was for troubled homeowners, both here in Hawaii and the mainland. Don’t the NAHB, Fannie Mae and any other overly cheery predictors realize that these foreclosures become bank REOs which bring down local markets?
Bottom line is trust your instincts. I am VERY leery of other people’s predictions — always consider your source of real estate information. Do they have a vested interest in their stated position or figures? Look behind the veil and you might develop some healthy skepticism. We believe that the preforeclosure market and REOs are here to stay for the next few years. Maybe after we clear through all this shadow inventory we can then face a brighter future for Hawaii’s and America’s homeowners, builders and anyone else who’s waiting for the return of a real estate heyday.
(source: shortsaledailynews.com)