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Almost half of homeowners with a mortgage can’t sell?

The media and wall street have been filling the airwaves with hype about a massive nationwide housing recovery.  I’m an optimist to a fault, so my cup is always half full not empty but let’s look at 2 main drivers of what is really going on in real estate right now:

1) Our nation’s banks, still weighed down by huge numbers of foreclosures are manipulating the housing inventory by kicking the proverbial can down the road on bank owned (REO) properties as well as pre-foreclosure properties where a homeowner is in default but the bank has not yet foreclosed

2) A huge number of homeowners are still upside down on their mortgages and unable to sell unless they find themselves in the unenviable situation of not being able to make their mortgage payments and are forced to sell by short sale (Zillow is reporting that almost half of homeowners can’t afford to sell).  These 2 factors are constraining housing supply and thus causing a tenuous and potentially short-lived increase in housing prices.  The bottom line is this–income drives EVERYTHING in our economy.  Our economy is getting better but not neither as fast as most of us would like.

Ultimately, people need money to buy houses (whether they are paying cash or financing a purchase with a bank loan).  I’m optimistic in the long run but skeptical in the short run about all the hype you hear from the media who’ve been known to invent stories and then conveniently report them as news!

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