Housing and Wealth - Part I (Supply and Prices)

Tuesday, September 22, 2009, 10:07 AM
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Tuesday, September 22, 2009

Executive Summary

Tracking the housing market helps us see where the economy is headed.  Two categories of data that are useful to focus on are house prices and housing supply.

House Prices

Measuring the value of housing is critical, because the amount of foreclosures and the economic fallout from them are both tightly linked to the difference between the current value of a house and the mortgage held on it.

Housing Supply

To appreciate housing supply, there are three things we need to track:

  • Total number of existing homes for sale (expressed in either a raw number or in “month's supply,” which takes the raw number and divides it by the current sales pace)
  • Total number of new homes for sale (expressed the same as above)
  • Amount of “shadow inventory,” which are homes that are on the books of the banks but have not been released into the market for sale

This is Part I of a two-part report.



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