U.S. Housing Market Is in Worse Shape than You Think: Altos Research

There have been a lot of articles the past month about the market taking another dip. I’ve been saying this all along… it was just a temporary increase in Fresno home values and would soon drop again. Fresno short sales are on the rise, Fresno foreclosures are coming on the market at a faster pace now. I haven’t seen a single reason why the Fresno real estate market should improve. Fresno Short Sales are here to stay and we’ve all seen the trend of higher end homes being short sold. I say we’ll be in this market (Short Sales) for at least 3 more years.

Source: DSnews.com
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.”

Data provided by Altosas recently as January pointed to a steady decline in housing inventories over the previous 16 months, at both the national and local market levels. But Sambucci says that quickly changed after the first month of this year.

Altos Research provided its assessment of the most stable housing markets…and the markets that it considers to be on shaky ground.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.