The housing slowdown has turned some parts of the Phoenix and Las Vegas metropolitan areas into “ghost towns,” where many unsold homes stand empty, Janet Yellen, president of the San Francisco Federal Reserve Bank, said Monday.
Yellen said that she heard the ominous description from a “major home builder,” who told her that the share of unsold homes in some subdivisions around the two Southwestern cities has topped 80%.
“Though the situation isn’t that bad everywhere, a significant buildup of home inventory implies that permits and (housing) starts may continue to fall, and the market may not recover for several years,” she warned, according to the text of a speech delivered Monday at the Hong Kong Association of Northern California in San Francisco.
The housing slowdown was one of several factors Yellen cited in which she argued that the current level of interest rates is “moderately restrictive,” and that it makes sense to keep it that way “for a time.”
Nationally, inventories of unsold homes have climbed as housing became less affordable, Yellen said in a meeting with reporters after her speech.
Speculation had been quite high in areas such as Phoenix and Las Vegas and now that prices may not be heading higher anymore, those speculators seem to be dumping inventory on the market, she added.
“The market (in these regions) has seized up to some extent and inventories are building,” she said.