Where’s the Bottom? March of the Zombies

Several months ago I earnestly asked a friend of mine who is a land economist, “Where’s the bottom of this housing market?” and he promptly answered, “I don’t know.”  However, being persistent, I asked again. This time he answered, “Well if you could tell me how much zombie housing is out there, I could make an intelligent guess.”

Since he’s very smart and this wasn’t the answer I expected, I cleverly replied, “What is zombie housing?”  To which he responded (and I loosely paraphrase), “It’s all the new housing under construction but not yet completed and sold, added to all the homes that have yet to be foreclosed at some point during this cycle.” I guess it’s sort of the housing version of the ‘walking dead’.

In talking with colleagues since then, I am increasingly impressed that there is a lot of zombie housing out there (well over 5 million vacant housing units) listed for sale in a market where a ‘healthy inventory’ would be only about 1.5 million vacant units listed for sale), and apparently no one yet has a good handle on it.

It is certainly understandable that no one can accurately predict how much housing will be foreclosed without knowing how weak the economy will get.  On the other hand, I’ve not yet read or heard anyone discuss exactly how many single family homes and new housing subdivision units are now under construction that have not yet been delivered for sale. If someone knows, I’d like to hear about it.

Or, maybe it’s just too scary to count the zombies….