Zelman estimates shadow inventory at 3 million homes and believes that not all of them will hit the market at once. For one, in judicial foreclosure states, it takes anywhere between two to three years on an average for a foreclosure to be completed.
Second, lenders face considerable challenges in evicting borrowers as they deal with new protection laws in states such as California and Nevada.
At any rate, foreclosed homes account for only 7% of the total inventory for sale.
The bottom line is, the rise in home prices appears to be sustainable and there is now considerable momentum in the market. "When home prices go in one direction, it tends to go in that direction for five to six years," Zelman said.
Zelman didn't share her housing forecast in the presentation, but according to a recent
Wall Street Journal
, she expects housing starts to double by 2014 and prices to rise 5% in the coming year.
"Affordability in home prices has never been better," she said. "You will kick yourself if you do not buy a house."
-- Written by Shanthi Bharatwaj in New York
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