Three Myths About Housing Market Rebound


“I think people who bring [shadow inventory] up at this point should be completely discredited, for no other reason than you have all of these investors who will buy it up,” said Burns. “How can you complain about the lack of inventory and shadow inventory in the same breath?”


Three Myths About Housing Market Rebound

Home prices have been zooming up over the past year in many of the housing markets that saw the biggest declines. Recently, some pundits have grown wary of the rally, arguing that it’s unsupported by fundamentals and marks the beginning of another housing bubble.

Housing is recovering due to the extremely low supply of homes for sale. Demand, meanwhile, is up amid strong appetite from investors and from extremely favorable affordability conditions thanks to record-low interest rates.

The upshot is that the recovery is unfolding faster than it would due to low inventory, low interest rates, and investors. But does that make for another bubble? Ivy Zelman and John Burns, two housing analysts that were among the first to call the bottom last year, highlighted three misunderstood concerns about the housing market:

Myth #1: Housing would crumble if the private equity-backed investors stopped buying.

Myth #2: Institutional investors must be overpaying for homes.

Myth #3: There’s a massive shadow inventory of bank-owned homes that will hit the market, scotching any recovery.

Read more about it here…


Leave a Reply