This article – posted on Morgan Stanley’s investor website – is perhaps the most succinct analysis of the current state of the national housing market that I have read, in a while.
It breaks down and explains – with references and analysis – the primary areas of concern. While some of these areas are not anything new, Richard Berner (author) does a great job of pointing out the housing risks as well as the strong points through the end of 2009 and what to expect coming into 2010.
He warns of payback from the home-buyer tax credit (with scant reference to a smaller, similar situation back in 1975), rising unemployment, possible looming foreclosures being dumped on the market (shadow inventory), and builders competing with the current, sizable inventory of distressed properties.
However, on the positive side, rates are still low, affordability is much better and still improving, and inventory (although still higher than we’d like to see) is still trending lower, which is great.