In the wake of a report from the National Association of Realtors stating that the housing market may have finally hit its bottom, a number of critics claim this is not the case.
According to a NAR chief economist Lawrence Yun the thinning inventory could result in stabile home price appreciation in number marketplaces in the near future.
However, Jonathan Miller of real estate firm Miller Samuel argues that the nation's thinning inventory is in fact not good news for the housing market. Although he agrees that a falling inventory could result in price stabilization, he noted that recently, there has yet to be a spike in the sales rate in order for this to happen.
Additionally, Miller applauded NAR for the member services they offer and success found in their monthly publication, but offered a few choice words of criticism.
"[NAR] would be a lot more successful as an organization if they became a trusted, go-to adviser, rather than putting out the predictable spin every single month when these reports come out," he said. "I think it's a disservice to members."
Rather than the fundamental market trend that an increase in home sales will result in a declining inventory, Miller claims that the inventory is decreasing as a result of a slow in the foreclosure process seen in the latter months of 2011 as major lenders worked to come to a settlement over the robosigning debacle.
This pause in foreclosures, is what Miller says led to the thinning inventory. However, he added that since reaching a $26 billion settlement between lenders and homeowners who were wrongfully foreclosed upon, there will be a revival of the process during the course of 2012, adding more housing stock to the inventory. Miller anticipates to see an estimated one million foreclosed houses to hit the market per year in 2012 and 2013.
Meanwhile, Miller also stated that a decline in seller confidence was another major factor behind the falling inventory. With home prices nearly 30 percent below levels recorded at the housing market's peak, a greater number of current owners are holding off on listing their homes as they wait for a rebound.
Additionally, the Federal Reserve recently announced that mortgage rates will be held near current lows until at least 2014. Since prospective buyers will be able to capitalize on the affordable rates for roughly the next two years, sellers may continue to hold onto their homes.