The housing market reportedly could see another plunge because of the "shadow inventory” of potential foreclosures and other distressed sales.
Shadow inventory will push housing prices down another notch, by as much as 8 percent to 11 percent through 2012.
John Burns Real Estate Consulting recently released a report that there could be an additional 4.7 million units, or a 10-month supply, The Wall Street Journal reports.
The report also estimates that the distressed share of home sales will rise to around 40 percent of all home re-sales through 2012. And that the shadow inventory of distressed loans will stay at elevated levels through 2016, the Journal reported.
The Irvine, Calif.-based consulting firm also said it estimates that distressed sales will reach 2.36 million in 2011, an increase from 2.05 million this year.
The overabundance of the number of houses has not changed despite prices of homes coming down.
The pre-bubble level was roughly 4 months of supply. This should continue to put pressure on real estate prices as demand simply fails to outstrip an overwhelming amount of supply, the report said.
Stan Humphries, chief economist at Zillow.com, said the government should not intervene any further because it would not help, Yahoo Finance Tech Ticker reported.
“I think that the markets are in a process now where they just need to work through their internal dynamics themselves. I do not think further subsidization – like the tax credit – is worthwhile,” he said.
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