The huge supply of bank owned properties continues to pull the housing market down, affecting not only the real estate industry but also its associated sectors, like the construction industry, the building materials market and the home services sector.
Most of those who operate in these segments expect 2012 to be a slow year, although they did admit that there had been no sign that it will get any worse. It seems that another difficult year in housing is to be expected. However, it is not as bad as outward appearances show.
Riding the worst of the tide
The housing market will eventually correct itself as it always does. As the cliché goes, it will get worse before it gets better. This is actually what is happening right now, with the market continuing to absorb bank owned homes and prices of residential properties remaining at record lows.
And there will be worse things to come as the new year starts, with properties from the shadow inventory finally hitting the market. Analysts estimate the shadow inventory at around five months of supply, an unhealthy level given that less-than-one-month is the ideal position for the housing industry.
Bottom of the market within sight
For those who have followed the trajectory of housing figures in the past year, most may have noticed that the five-month supply of unsold properties actually represents a decline. At the start of 2011, shadow inventory estimates were around six or six and a half months. The decline may seem insignificant, but at least there has been a decline.
The coming 2012 may not be the time that the housing market will pick itself up, but it is highly likely that it will be the start of the "bottoming out" process. With mortgage rates at their lowest and bank owned properties remaining cheap, home buying activities will likely pick up, which will only mean good things for the housing sector.
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