Good article on how the banks are still wrecking havoc on the housing market by Abigail Caplovitz Field
"Regardless of the recent bullish stories on the housing market (examples here, here, here and here), housing market fundamentals are lousy. Demand in the last decade was wildly distorted by banker abandonment of underwriting and appraisals. Now bankers are worsening the crash they created. As a result, prices will just keep falling, and foreclosures cannot lead to clearing the market (regardless of what some say). Foreclosures can only make the problems worse."
She goes on to talk about how excess demand was created in the bubble years by extremely lose credit, existing excess supply, and more foreclosures to come. The one thing she touches on that hits home with me is that the banks are manipulating inventory, creating bidding wars in some markets by holding inventory back. I totally believe this. With all the criminal activity the banks have been involved in through this crisis, with basically no consequences, except promising to help people or be better in the future, why would they not continue with their shady behavior? By manipulating inventory they are again creating a false market driven by greed. The banks could solve a lot of the problem in an solution Abigail gives, but I am with her there to, NIL.
"The banks could substantially boost demand by writing all the underwater mortgages down to market value. People would be able to sell, and buy, and millions of foreclosures would be averted. But the chance the banks will take such drastic action is nil. Not essentially nil, like Powerball odds, but nil.
And nil is also the chance that housing is headed toward a broad based recovery, even if some local markets, unhampered by massive bank-owned inventory and large numbers of underwater homes, show sustained improvement."