At present, banks and lenders own more than 872,000 homes in the United States today. And that number, twice the number of REOs in 2007 and set to grow by around 1 million in the years ahead as current foreclosures move forward, is starting to make a lot of real estate professionals pretty nervous. Although home sales volumes are up, many experts fear that the growing backlog of foreclosures and the necessity of getting them off the balance sheets is going to create a “vicious cycle” of depressed home values that cannot make a recovery until the foreclosure backlog is reduced – and that could take many, many years as some forecasts predict that 2 million homes will be REO properties before the bottom truly hits.
Nationwide, Moody’s analytics predicts that the foreclosure backlog could take three more years to clear and that home values are likely to fall another 5 percent by the end of 2011. However, the firm predicts a “modest rise” in prices in 2012, which has some people thinking that the situation might not be quite as bleak as it seems. However, regional analysis is going to be more important than ever before for real estate investors. For example, while hardest hit areas like Phoenix and Las Vegas are finally starting to work through their backlogs as prices get so low that buyers – both investors and would-be homeowners – can no longer resist, real estate data firm RealtyTrac recently released numbers indicating that New York’s foreclosure backlog will take more than seven years to clear. Currently, it takes an average of 900 days for a property to move through the state judicial system. This means that while New York City may be, as some residents and real estate agents insist, impervious to real estate woes, the state market could suffer mightily in the years to come as those foreclosures slog through the system.
Do you think that a 5 percent drop in price in the coming year followed by “modest gains” sounds terrible, or does that just get you in the mood to buy?
Bryan Ellis Real Estate Blog
- A Closer Look At The Glut Of Distressed Homes In The Pipeline (businessinsider.com)
- Housing Market’s Prospects Bleak As Foreclosed Property Backlog Grows (huffingtonpost.com)
- Banks need more lawyers for foreclosures (georgegmiller.wordpress.com)
- RealtyPartner: Our Real Estate Market Still Isn’t Looking Too Good (prweb.com)
- Mortgage Delinquencies Fall (online.wsj.com)
- U.S. Housing Market: 6 Million Final Stage Foreclosures by 2014 (Guest Post) (businessinsider.com)
- Is it cheaper to buy land from bank foreclosure or from real estate agent (wiki.answers.com)