With the surge in sales activity, the number of unsold homes on the market is falling rapidly. Recovery skeptics keep arguing that there is a second "wave" of foreclose properties that is set to hit the market sometime in the next several months. Banks are said to be sitting on a ton of properties and when they begin to release them, prices might plunge again, setting the economy up for another slump, or so the theory goes. It may well be the case that there are lots of properties that will be hitting the market soon, but the way things are going, the market soon is going to be begging for more inventory. At the right price, which it appears we have found, the market can handle a huge volume of transactions without suffering indigestion.
While, according to this FDIC report in USAToday, banks are still holding back business loans:
ReplyDeletehttp://www.usatoday.com/money/industries/banking/2009-11-24-fdic-bank-profits_N.htm
It strikes me that the decline in bank lending is a function of two things: more restrictive lending practices designed to avoid losses, and reduced demand for loans on the part of businesses trying to deleverage.
ReplyDelete