by Calculated Risk on 2/13/2011 07:13:00 PM

From David Streitfeld at the NY Times: Housing Crash Is Hitting Cities Thought to Be Stable. A few excerpts:

In the last year, Seattle homeowners experienced a bigger price decline than in Las Vegas. Minneapolis dropped more than Miami, and Atlanta fared worse than Phoenix.

The bubble markets, where builders, buyers and banks ran wild, began falling first, economists say, so they are close to the end of the cycle and in some cases on their way back up. Nearly everyone else still has another season of pain.

The amount of pain will depend on the local level of inventory - including the "shadow inventory".

And the following excerpt hits on two topics we've discussed ad nauseam over the last 5 year: 1) sellers chasing the market down, and 2) accidental landlords waiting for a "better market" to sell (part of the shadow inventory):

Megan and Ryan Dortch tried to sell their one-bedroom Eastlake condo for $325,000 two years ago. They rejected an offer of $295,000 as inadequate. A year later, they relisted it for $289,000, then $279,000, which was less than they paid. ... They are now renting out their old apartment at a small loss every month ...

[W]henever the market finally does pick up, all those accidental landlords will want to unload, putting another burden on the market. “So many sellers are waiting in the shadows,” said Redfin’s chief executive, Glenn Kelman. “The inventory is going to expand and expand and expand. I don’t see any basis for significant price increases.”

Watching existing home inventory will be very important this year. Areas with high levels of inventory will probably see more price declines. It is hard to tell about inventory right now - usually inventory is pretty low in December and January, and then increases sharply from February into the early summer - so we will know more about inventory soon.

Earlier:
• The busy economic schedule for the coming week.
• Summary for Week ending February 12th