In addition to the piece I posted yesterday, here's a very detailed and revealing look at the sorry state of the Los Angeles housing market. According to the author's analysis,

"Add the shadow data columns up and you get a hidden inventory that is nearly 3 times the MLS data. The difference is 3 months of inventory versus nearly 14 months of inventory."

Click here for all the gory details:

http://www.doctorhousingbubble.com/foreclosure-box-the-most-comprehensive-shadow-inventory-housing-analysis-for-los-angeles-county-examining-269-zip-codes-and-finding-100000-shadow-properties-while-public-views-1900/

I keep wondering about the awful impact that the next wave of mortgage resets are bound to have on the already devastated residential housing market in 2010. And the best outcome that seems possible is a gradual but lasting transformation where families who can afford to maintain a mortgage - or own homes outright - will congregate in safety zones to form smaller community clusters, leaving other areas plagued by a combination of abandoned homes, outlandish taxes and rising crime rates, to fend for themselves.

This is not the end of US civilisation by any means but rather a natural reaction of sustainable Austrian economics that ensures Capitalism will continue to thrive at the end of the day. The fact of the matter remains too many homes were built and it will take time to reach equilibrium again - probably a decade or so now that we find ourselves stuck in the muck of a lasting depression.

Unfortunately to reach that point of economic Nirvana the piper must first be payed in the years to come and this means wringing out impractical and bloated debt excesses, at the expense of some communities that must morph into something that more closely resembles modern day Detroit. I only hope that until Nirvana arrives that the politicians won't give in to rising socialism during this required period of economic rebalancing and change the economic face of America forever into something that more closely resembles the eternal treadmill of corrupution and grinding poverty that pervades South America.

ESL