CHESSNOID

Since the housing bubble burst, the inventory of foreclosures are starting to pile up.  The banks can not keep up with the number of homes they are taking back.  Each house they take back actually hurts their already existing inventory of homes that they can not unload.  I believe this is another way the banks cook their books by hiding there losses or deferring them into the future as far as possible.

NEW YORK (CNNMoney.com) —

Housing might be in worse shape than we think.

There is probably even more excess housing inventory gumming up the market than current statistics indicate, thanks to a wave of foreclosures that has yet to hit the market.

The problem: Many foreclosed homes and other distressed properties that are now owned by banks have yet to be listed for sale. The volume of this so-called ‘ghost inventory’ could be substantial enough to depress already steeply falling prices when it does go on the market.

“That’s not good news,” said Pat Newport, an analyst with IHS Global Insight. “[Excess] inventory is the biggest problem in housing these days, and it leads to lower housing prices, which leads to more foreclosures.”

RealtyTrac, the online marketer of foreclosed properties, recently discovered that it has far more foreclosed properties listed in its database, which the company compiles using courthouse records, than there are listed in the multiple listing services (MLS) maintained by real estate agents.

RealtyTrac looked at listings in four states, California, Maryland, Florida and Wisconsin, and found that they contained only a third of the foreclosures it has in its database.

The ghost inventory does not include the next wave of foreclosures on the horizon. Hiding these foreclosed homes will make it worse when the next set of defaults take place from arm resets.

The recession we are in will not bottom out until the housing market bottoms. If banks are not willing to be truthful with their numbers, there is no justification for giving them more bailout money.