Housing recovery? Don't bet on it
We're still a long way from clearing through the nation's supply of distressed homes.
Now it will take 44 months, according to Standard & Poor's. Previously, the firm had thought 40 months was enough time. Builders such as Toll Brothers (TOL), whose stock is down 15% since April 2010, are desperate to see that supply tighten up.
What changed? The housing picture worsened in the third quarter, S&P says. The volume of distressed properties continued to grow, and by the end, the principal balance of those homes surpassed $450 billion.
S&P also looks at the housing situation in large cities and says the picture is especially bleak in New York. There it will take 10 years to clear through inventory, analysts said. That's twice as long as any other large city in the country. Post continues after video:
Miami, however, is looking brighter. That's the only large city to see the time estimate shrink to clear through distressed properties.
So how do S&P's figures fit with the supposed housing recovery that may be under way? Well, for every positive figure you see, there are about five negative ones.
Andrew Bond covers the conflicting views on housing well in a recent Motley Fool report. Take, for example, the 3.9% increase in housing starts in November. Sounds great, right? Well, until you read that home prices fell in October in all 20 cities tracked by the S&P Case-Shiller composite home price index.
Toll Brothers shares were rising Monday after the company reported a profit last week, breaking 11 straight quarters of losses, but the profit was mainly due to tax benefits, Bond writes.
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