Rantings and tirades of a frustrated economist.
Perfect timing.Currently there is a large gap between the number of houses which have been foreclosed upon and the number which have been sold. This has become known as the "Shadow Inventory" of houses.Why would banks not be selling the houses they've foreclosed on?One reason is that they've simply got too many to handle. This hypothesis is known as "The python eating a pig."Another possible reason is that banks don't want an adverse price response from dumping so many properties on the market at once. But how could they all coordinate their behavior? If they all held properties off the market, prices would stabilize. But if prices are stable, individual banks have an incentive to unload everything they have.The most plausible theory is that they don't want to take immediate write-downs which would jeopardize their capital.There are also houses which are in default which have not yet been foreclosed on. Some speculate that banks don't want to be liable for property taxes, maintenance, and safety in abandoned houses which become crack dens and prostitution pits.There are approximately 600,000 houses in the Shadow Market, 80,000 of which are in California.
You will not believe how many hits i've gotten from that - someone posted it at reddit (http://www.reddit.com/r/WTF/comments/90g8b/snake_observed_while_eating_goanna_for_5_hours_pic/) and i've received 29k+ views to that page on 12/June alone, and looks like there's gonna be a fair bit today too. un-be-freakin-lievable.And i thought it was average too, almost didn't post it.
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