
Bidding wars in an environment of weak demand are a sure sign of restricted inventory, a problem intentionally engineered by lenders. When I wrote Must-sell shadow inventory has morphed into can’t-sell cloud inventory, I outlined how lenders removed inventory from the MLS by denying short sales and by modifying home loans rather than foreclosing on delinquent borrowers and selling the resulting REO. Lenders schemed to reduce the MLS inventory enough to engineer an artificial shortage of homes available and force buyers to pay higher prices. They were successful. But other than rising home prices, what evidence do I have that these policies contributed to rising prices? We know from the graph of purchase mortgage originations that demand for housing hasn't…[READ MORE]