15 Charts You Must See Before Buying A House

Editor’s Note: The U.S. housing market remains a drag on the economy. Recent positive data, specifically positive pending home sales data, suggests the market may be improving.

But there remains great worry around the U.S. housing market. New home sales fell again in October, and the shadow housing inventory in the U.S. has increased to 2.1 million. Worries over robo-signing, foreclosures, and mortgage putbacks have plagued the market.

Michael David White has a breakdown of the market’s problems and 15 charts you must see before buying a house.

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[slide
permalink=”inventory-of-existing-homes-is-incredibly-high-1″
title=”Inventory of existing homes is incredibly high.”
content=”Inventory/Months of Supply – In July sales fell to a record low and inventory in months exploded up into a record high. August, September and October have all be repeats of July’s poor reading.”
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[slide
permalink=”and-that-inventory-number-isnt-even-counting-the-shadow-inventory-2″
title=”And that inventory number isn’t even counting the shadow inventory.”
content=”Inventory – Units for sale: The dark side of a dark inventory number is a huge collection of shadow inventory not yet listed for sale. A recent estimate puts that number at 2 million. Distressed supply could overwhelm demand.”
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[slide
permalink=”there-are-serious-consequences-from-the-housing-bubble-3″
title=”There are serious consequences from the housing bubble.”
content=”Mortgage Bubble: Four years into the crash the fundamental question remains: Will we spend the next 10 or 20 years paying off the mastodon debt used to purchase this bubble? The sane answer is ‘no.’ The official answer is ‘yes.'”
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[slide
permalink=”the-housing-sector-is-in-zombie-mode-4″
title=”The housing sector is in zombie mode.”
content=”Mortgage Bubble – The price of real estate has adjusted drastically. Outstanding mortgage debt used to purchase the bubble remains unchanged. The housing sector is in a zombie mode.”
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[slide
permalink=”and-even-more-of-the-housing-market-could-turn-zombie-5″
title=”And even more of the housing market could turn zombie.”
content=”Mortgage Bubble: If values fall 40% nationally HousingStory.net estimates that as much as $5 trillion of mortgage debt will be contaminated and prone to either default or to zombie-ness.”
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[slide
permalink=”more-defaults-could-lead-to-an-even-larger-fall-in-prices-6″
title=”More defaults could lead to an even larger fall in prices.”
content=”Mortgage Delinquencies: All price forecasts are provisional because the current default rates have not been seen before by any observer. If 11 million mortgages go bad, it could easily lead to a major new fall in prices.”
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[slide
permalink=”distressed-sales-could-further-crush-prices-7″
title=”Distressed sales could further crush prices.”
content=”Mortgage Delinquencies vs. Units for Sale: Look at the massive gap between ‘X’ and ‘Z.’ Delinquent mortgages equal sixteen times average monthly sales. The gap proves that distressed supply could ruin prices.”
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[slide
permalink=”prices-may-still-have-a-way-to-fall-8″
title=”Prices may still have a way to fall.”
content=”Price Trends: Based on the long series by Case Shiller current values are still far above long-trend norms. This is not a signal to buy. It’s a seller.”
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[slide
permalink=”we-may-only-be-halfway-through-the-total-fall-9″
title=”We may only be halfway through the total fall.”
content=”Price Trends – The HousingStory.net forecast of four major property prices indexes suggests we are approximately half way through the total fall in property prices and that prices will fall an additional 18% from current levels.”
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[slide
permalink=”example-japans-home-prices-have-fallen-for-19-years-in-a-row-10″
title=”EXAMPLE: Japan’s home prices have fallen for 19 years in a row.”
content=”Price Trends – The Japanese have 19 years of consecutive falling real estate prices. A real estate bubble is deadly serious business and is capable of destroying economic growth if handled incorrectly.”
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[slide
permalink=”the-potential-is-for-a-global-housing-bubble-11″
title=”The potential is for a global housing bubble.”
content=”Price Trends: America’s housing bubble was far greater than any on record. What if housing prices in many other advanced economies went far more manic than ours? It means you should plan for global catastrophe.”
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[slide
permalink=”pending-home-sales-are-still-at-crash-levels-12″
title=”Pending home sales are still at crash levels.”
content=”Sales Pending: After free down payments expired in April, demand has consistently maintained the weakest readings in the history of the series.”
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[slide
permalink=”are-we-still-in-a-housing-depression-with-all-the-us-government-has-done-13″
title=”Are we still in a housing depression, with all the U.S. government has done.”
content=”Sales Closed: Sales of units are weak in the last three years even with unlimited government subsidies for new mortgages. The prescient question: Are we in a housing depression anyway even with unlimited mortgages from the Bank of Uncle Sam?”
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[slide
permalink=”the-end-of-free-down-payments-has-crushed-units-sold-14″
title=”The end of free down payments has crushed units sold.”
content=”Sales Closed/Units adjusted – Here again we see a stark and negative trend following the expiration of free down payments. Demand as measured in closed sales has been consistently worse than any prior period in the crash.”
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[slide
permalink=”sell-may-still-be-the-only-way-to-move-forward-15″
title=”Sell may still be the only way to move forward.”
content=”Proceed with great caution. The U.S. housing market is riddled with massive risks which will almost certainly lower prices. The global economy remains in quiet crisis due in part to property bubbles scattered through the major economies of the world. There’s no shame in renting. There’s huge risk of loss for buyers. And for sellers? Sell.”
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[slide
permalink=”still-have-any-confidence-in-the-housing-market-16″
title=”Still have any confidence in the housing market?”
content=”Here are 15 signs the U.S. housing market is headed for complete and total collapse >
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