Positive Housing Numbers Don't Mean Recovery Anytime Soon!

I read article after article about how home prices and sale numbers are rising. These numbers are great and encouraging, but do not necessarily mean the Real Estate Market is on the path to recovery. I live in Georgia, and I see no residential construction happening. Companies that built 400-500 homes per year are out of business. Completely out of business. Everywhere I go I see vacant developed lots sitting. I could only guess as to how many there are, the number is staggering though. These lots that were selling for $35-60k are now available for $5-10k. The banks are practically giving them away. If there were ever a time to build it would be now. With lot prices so low and lumber companies begging for business, home builders should be able to build a very affordable product, right? So why aren't they?
Several reasons, first and foremost the banks won't lend the money for the construction loans. Regardless of what President Obama, Tim Geitner or Joe Biden are saying, there is practically no lending going on right now. Why won't they lend? Good question, that leads to reason number two. Banks won't lend because there is still way too much inventory on the market. Foreclosures and distressed properties (Short sales) account for around 30-35% of all current sales. In addition to that inventory, the banks know that they have over 500,ooo foreclosures that they have yet to put on the market. If there was a recovery in sight, the banks would be doing construction loans. When there is an opportunity to make money again, they will be the first to jump back in.
The final obvious reason is that first time homebuyers cashing in on the Homebuyer Tax Credit account for more than half of all sales. What will happen when the Tax Credit goes away? Everyone is sitting on the fence waiting to see what Uncla Sam does. That is the biggest problem when the government gets in the way, they do not realize that these programs do not sustain growth. Look at the Cash for Clunkers program. Auto sales were awesome in August during the program, what were they in September and October? These government programs artificially boost numbers. That's why you cannot let these numbers fool you. The Housing market is going to be in the dumps for several years. We have to clear all the distressed investory out before any consistant level of home appreciation will occur. We also have to start building homes again. That's not going to happen until banks start lending money again. Regardless, we have a long wait in front of us. Bad for the economy, good for Real Estate Investors. Real Estate Investors will continue to have unprecidented opportunity to cash in and get rich for awhile. That's why we are sticking to the Real Estate Investing business for now.