It just goes to show that nothing is ever all bad in real estate. Every negative action has a positive reaction somewhere for some real estate owner or investor. That is probably most evident in the reaction of the housing market to the foreclosure freeze. While analysts predicted massive doom and gloom if a national foreclosure moratorium went into effect – and, indeed, we agree with them wholeheartedly – there were some people in certain areas of the country who benefitted from the temporary halt to foreclosures. In fact, conventional homeowners trying to sell their homes in the conventional fashion actually experienced a small spike in home prices in areas around the country[1].
This trend was particularly evident in South Florida, where sales numbers dropped as expected, but median home prices rose nearly 2 percent. Of course, many experts and homeowners with their houses still on the market fear that this is temporary, since most lenders have released their foreclosure moratoria at this point, but buyer sentiment indicates that traditional owner-occupant sellers and non-distressed sellers are going to continue to have an advantage in the market at least in the near future while buyers – investors and otherwise – get over their concerns about bank-owned and pre-foreclosure properties.
As the “shadow inventory,” a projected 2.1 million homes that will soon be for sale at bargain basement prices as distressed lenders and run-down owners give up the fight to keep their properties, looms, it is arguable that traditional sellers are going to need every advantage in order to remain in the game at all. Do you think that the foreclosure freezes were ultimately a good thing for the industry, or just more bad news and more artificial manipulation of the housing market?
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[1] http://www.miamiherald.com/2010/11/24/1940699/shadow-inventory-haunts-residential.html
And that shadow inventory is going to come on the market faster than many think. Bank of America received a fine for having REOs on the books for too long. I am sure others are or will be getting their fine soon. These are large fines, an incentive to just push them out the door. Thank you banking regulators!
So look for values to drop through the floor again, and soon we will have more than we know what to do with, as if it isn’t that way in several places already.
If it wasn’t for the massive artificial government stimulus we would be in a depression now. Now we can’t re-inflate the bubble any more. I guess the big boys are just hoping something might save us down the road–even though they’ll be alright. Of course they wouldn’t want, you know, you know, re-distribition of the wealth. It seems without a good economy, good demand, property values will sink.
Anything that interferes with the free market will tend to prolong the agony. For example, government interference in the ability for homeowners and investors to strike deals that are in the best interest of both or threats that investors may be held accountable for Seller’s Remorse cause many investors to decide the risks outweigh the potential for profits. As a result, more homes become REOs and are purchased directly from the banks rather than the homeowners, meaning the homeowners, the banks, and the investors are all losers and there is no winner. Government officials parade themselves as protectors of the people, but I think that mask is becoming rather thin these days as well.
AMEN TO THAT KEN THE GOVERMENT IN BAD SHAPE