subject: The Real Facts Regarding The U.s. Economy, Housing Market, And The Shadow Inventory Phenomenon... [print this page] According to Bloomberg and Reuters, the housing recovery is "on course". Housing starts are up 1.6% this month, the highest increase since February 2008.
Builders are breaking ground, homes are being built. The economic recovery is supposedly on the rise...yet no one is mentioning anything about the shadow inventory.
Shadow inventory? The "shadow inventory" of homes includes all delinquent loans and real-estate owned (REO) property that has not yet reached the market.
Reasonable market offers are being refused by banks, after months of painful agonizing delays on short sales. Asking prices are not even close to what buyers are offering to pay. Banks seem to be stalling official recognition of losses on loans against properties that should be in REO.
Bottom line net result: An enormous number of homes for sale are not really on the market to actually be sold because sellers are trying to recover as much as they can against under-water loans. "What do you think might happen to housing prices if all these homes were really put up for sale at market values (this is what buyers are willing to pay right now)?"
The US Federal Government stated this week that foreclosures set a record in the first quarter of 2010.
Bank of America has admitted that half of their mortgage customers haven't paid a dime on their loans in a year.
Interesting Signs of Recovery
With 7 million home owners in notice of default or foreclosure, the White House is on record stating that they want to help nearly 4 million with the Home Affordable Modification Program a.k.a. HAMP.
But what are the results? Only 230,000 people have gotten permanent loan modifications thanks to HAMP. That's only 3.3%.
The typical homeowner who got a permanent modification now has a mortgage payment equal to 31% of their gross income. So even with a modification, that number is a bit high.
Compound that with all the other debt that this average mortgage adjustment recipient has, including credit card debt, car loan debt, (also known as the back-end ratio) the real number skyrockets to over 61%.
So think about that...let it sink in for a second or two. 61% of your gross, "before tax" income is going to debt. There is simply no more money for anything else after the daily necessities such as gas and groceries.
How can this person, who is very much like you and me, save for retirement? I won't even go into Social Security.
Did you know this is the first year that Social Security payments exceed tax income revenues? This wasn't supposed to happen until 2016. But that's another story for another time.
So let's bring this home: what can you do? You need to stop thinking things are 'just ok' and start living like your retirement is on you to provide for you and your family or loved ones.
That means investing your retirement in the deepest discounted property in decades. This is no joke. You can even use your IRA or 401(k) to do it tax-free!
