More home Foreclosures!!!
Most people think that the worst of the housing crisis has passed. They should be preparing for a flood of home inventory that will overwhelm the markets and cause prices to fall even further.
For the past 3-4 months there has been a form of moratorium on foreclosures set up by the present administration. Most institutions with delinquent mortgages have not foreclosed and your tax money has been used to cover the bank losses during this period (dumb move). There are only a few foreclosure signs in the neighborhoods, but, the rest of the banks are rushing to get their properties onto the market.
From December 2008 until March 2009 the number of bank asset managers inquiring about foreclosures dropped by 80%. Recently, the number of inquiries has skyrocketed as they see the inventory coming to market. Expect a flood of new properties in June.
Many investors entered the market too early and are now unable to “flip” the properties. They will now have these same homes foreclosed on them.
All of the administration’s efforts to revive the housing markets have failed. Those who are losing their jobs cannot buy homes, interest rates are rising, crowding out buyers and prices are continuing to fall.
Rental properties now have negative cash flows and will also come onto the market. In addition, builders are being supported in states like California. The state is providing a $10,000 credit to buyers of new houses bought directly from builders on top of the $8,000 Federal Credit. This encourages builders to build more houses that are not needed. It is estimated that more than 500,000 new homes will be built this year.
Lastly, many second homes were bought from the equity in people’s primary residence. Many of these homeowners need cash so they are selling the vacation homes which adds more inventory.
So with the end to the foreclosure moratorium and unemployment increasing it shows that more foreclosures are on the way. Keep you powder dry as there will be GREAT opportunities for you to make “buys” as prices continue to erode.