From Alternet: http://www.alternet.org/ny-times-ignores-banks-latest-role-distorting-housing-market
The newspaper reports a shortage of houses for sale, not surplus of underwater loans.
By Steven Rosenfeld
March 22, 2013
The New York Times doesn’t get it. Thursday’s front page reported that the U.S. housing market was again booming, with demand rising and builders racing to catch up. “After six years of waiting on the sidelines, newly eager home buyers across the country are discovering that there are not enough houses,” it breathlessly began.
The article cited the housing market in Sacramento, California, where home values have tracked the national average—rising from 2000 to 2005, falling in 2006 and bottoming out in 2009, and climbing back up today. “In my 27 years, I’ve never seen inventories this low,” it quotes a local realtor. “I’ve also never seen a market turn so quickly.”
The problem with Catherine Rampel’s report is that her analysis completely omits one of the biggest drags in the American economy that is creating an artificial shortage of homes for sale and inflating home prices. That trend is how banks are not willing to revise loans of people with ‘underwater’ mortgages, or who owe more than current home values.
Amazingly, one of the sources cited by the Times, Zillow Real Estate Research, notes that as of late February, 41.7 percent of the homes in Sacramento were underwater, or had “negative equity” averaging $100,000 below the current market values.
The Times correctly noted that large scale investors have been buying up foreclosures and so-called starter homes, based on business models that envision renting the properties. But nowhere does its report mention that housing market “scarcity” is a direct result of banks refusing to modify mortgages for more than a third of Sacramento home owners.
Continue reading at: http://www.alternet.org/ny-times-ignores-banks-latest-role-distorting-housing-market
