Will 2016 Be the Turning Point for Housing?

Article originally posted on on January 20, 2016

NEWPORT BEACH, CA—Post-housing crisis, the residential market needed to return to a “healthy” inventory level to aid the recovery, but the recovery is still hobbling along, Landmark Capital Advisors’ managing directorAdam Deermount tells GlobeSt.com. This is evidence that what happens in the present may appear positive or negative at the time but the true impact cannot and will not be known until time passes, he says. We spoke exclusively with Deermount about the housing stock and how perceptions have changed regarding the sector’s health.

GlobeSt.com: What have you noticed about the low volume of home starts and the housing stock over time?

Deermount: During the housing crisis, existing housing inventory ballooned to 12 months of supply, causing new-home development and construction to grind to a virtual halt. In the years that followed, new-home starts remained low as distressedexisting homes were gradually bought up, taking inventory off the market. This altered the ratio of new to existing home sales that had been in place since the ’90s, forming what Bill McBride ofCalculated Risk coined the “Distressing Gap.” New home sales have stayed at a depressed level ever since, recovering only modestly.

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GlobeSt.com: How has the industry’s perspective on this changed?

Deermount: The initial marketplace response was that this was both a good and necessary trend since the market had to get back to the point where inventory was at a “healthy” level in order to set the foundation for a sustainable housing recovery. Well, the reduction in inventory happened. The healthy recovery, not so much.

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