THE HOUSING MARKET CAN SO WITHSTAND THE COMING DELUGE FROM THE BANKS

What shadow housing inventory? From the South Florida Sun-Sentinel:

The number of vacant homes in Broward and Palm Beach counties nearly doubled during the past decade, as the devastating housing collapse led to record foreclosures.

Broward had 124,341 vacant homes last year, up 44 percent from 2000, according to U.S. census figures released this month. Palm Beach County’s vacancies rose 46 percent to 120,367.

Put aside that increases of 44% and 46% don’t count as doubling. I get the larger point: there are plenty more empty homes in Broward and Palm Beach Counties than there used to be. So vacancy rates are through the roof, right? Er, no:

The vacancies far outpaced the increases in housing stock across the two counties.

While the countywide vacancy rates are in the mid-teens and rose only a few percentage points, that still represented tens of thousands of housing units.

Only a few percentage points higher! A puzzlement? Not really. The doom-and-gloomers who predict that foreclosing banks will eventually flood the market with homes for sale forget that as foreclosures have zoomed, housing starts have fallen to record lows. The effect hasn’t quite been a wash, but the collapse in new-home construction has apparently gone a long way in helping the market absorb the supply from the banks. And housing demand won’t stay pent-up forever. (Don’t get me started on the household formation rate lately. Do you think those people are going to live with their parents forever?)

Final reason that shadow inventory not likely to be especially shadowy: as home prices have fallen in Florida and other hard-hit markets, the demand side has been bolstered by investors, who find they can buy properties, refurbish them, and profitably offer them as rentals. In Broward County last month, 69% of sales didn’t involve mortgages. And the rental market is, ahem, active. More from the Sun-Sentinel: “People who lose their homes in foreclosure typically stay in the region to rent, which may explain why the supply of vacant homes isn’t bigger, said David Dabby, a Coral Gables-based housing consultant. ‘They’ve got to live somewhere,’ Dabby said.” You bet they do. . . .