Housing Crash Will Resume as Seven Million Foreclosures Hit, Amherst Says

Housing Crash to Resume on 7 Million Foreclosures, Amherst Says
By Jody Shenn


Sept. 23 (Bloomberg) -- The crash in U.S. home prices will probably resume because about 7 million properties that are likely to be seized by lenders have yet to hit the market, Amherst Securities Group LP analysts said.

The “huge shadow inventory,” reflecting mortgages already being foreclosed upon or now delinquent and likely to be, compares with 1.27 million in 2005, the analysts led by Laurie Goodman wrote today in a report. Assuming no other homes are on the market, it would take 1.35 years to sell the properties based on the current pace of existing-home sales, they said.

Helping to stoke speculation the housing slump has ended, an S&P/Case-Shiller index for 20 U.S. metropolitan areas showed the first month-over-month increases in values since 2006 in May and June, reducing the drop from the peak to 31 percent. Echoing other mortgage-bond analysts including those at Barclays Capital Inc., Amherst cautioned that a change in the mix of foreclosure and traditional sales over different parts of the year lifted prices in the period, as the distressed share shrank.

“The favorable seasonals will disappear over the coming months, and the reality of a 7 million-unit housing overhang is likely to set in,” they said.

The amount of pending foreclosed-home supply has been boosted by more borrowers going into default, fewer being able to catch up once they do, and longer time periods to seize properties because of issues such as loan-modification efforts and changes to state laws, the New York-based analysts wrote. ............(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aw6_gqc0EKKg

so it's not really news to people who have been following his articles.

It's good to see this mentioned by the MSM, though.

but is being held off the market in an attempt to try to keep prices from bottoming out.

Whether the next 7,000,000 foreclosures will cause those properties to be listed is anyone's guess.

I think the crash is over. I think the slow slide has just begun.

foreclosures fast. I sell Real Estate. You can't believe the amount of BS you have to go through to sell a foreclosure. Short sales are a nightmare. Even HUD is getting ridiculous to deal with. Everything takes 3 months to close, if it closes at all. Banks are controlling commissions. You can work for months on something and at the last minute, the bank decides it's going to pay you less. Sometimes they take 30 days just to respond to an offer. Banks change hands in the middle of a transaction and you have to submit everything again. They lose documents and change the rules as they go. I think the prices will begin to go down again when investors have bought their fill and start getting nervous. At least on the low end, they're still flying off the shelves with multiple offers. Even cash offers take 2 months to close. Stupid, stupid, stupid.

A foreclosure up for sale or auction is worth only what it will bring in.

They knew if they dumped everything they had on the market as soon as they got it, prices would be significantly lower than they are now.

Maybe they should be. The banks just didn't want to take that chance.

till the markets pick up, let them onto the market slowly, and make a killing. Particularly if I had taxpayer funds to support me in the interim.

Granted, your POV would be more likely if banks had been allowed to fail.

and in MI, they are paying a higher rate because is not the banks' principal residence. They are paying maintenance costs in some cases, and the value goes down for every day they sit vacant. Mold, vandalism, insects, squatters, critters, weeds...not a very good investment strategy.

They are working 24/7 convincing each other that everybody else is cleaning up in this "post bottom market".

It would be funny if it weren't so very sad.

down unsold developments because they have been severly vandalized and it's cheaper to tear them down than fix them up and try to sell them.

Because siezing the house would result in having to write off the loan and hurting the Banks balance sheet.

When do I jump?

Am I looking for foreclosures to level off or what?

How long are prices going to go down before they start to stabilize?

"You work, hard"

Yes, it's a buyers market, but don't let it fool you. There are people who will do better in it than others. Those will be the people who make the effort to find a realtor who knows what he is doing, who know the inventory, and who will do the work with you. Any realtor who encourages you to offer full price, or hems and haws about what "the bank will accept" - DUMP HIM. He's lazy. He want a quick transaction.

"follow the rules"

Make a list of everything you want. In this market, there is no reason why you shouldn't get it all. There are pretty houses with new everything out there in every price range. There is no reason to settle for less. You want a house with a pool and a back porch? Don't be sidetracked by a house with really cool appliances, those appliances are already outdated. Make a list, stick to it. The old rules hold true: cheapest house in the best neighborhood.

"Get the house you really want."

If you are an emotional buyer, recognize it. If you are OK with the fact that the house you "love" might not be the best investment, or even the most functional, then WRITE THAT DOWN and see if it really sits well with you. Write down on a piece of paper, "I'm OK with making a bad investment or picking a house that doesn't meet my present or future needs because it's really cool and I just love it." Read it to your mother and your best friend. If it still makes sense to you, then go for it. But haggle and get it cheap.

It's better to miss the bottom than to miss the rise. Property values may go down, but once they start back up might not be a good time for you. If you are ready now, then go out and buy a house and go for a bottom price.

Never the sharpest knife in the drawer, he spent the small amount of money he saved for retirement buying four condos in Florida at the height of the bubble hoping to sell them for a profit. He is 2 to 3 years from wanting to retire and all four properties are in foreclosure. All he has left to look forward to is Social Security and very few can live on that alone. He has a giant mortgage on the house he lives in. He always was a hard worker, I will give him that. He just did not plan for the future. Despite his affairs, I actually feel sorry for him. He will have to work forever.