"Waiting For Godot" or The Missing Foreclosure Glut
September 28, 2009
For the better part of this year and ongoing, economists and the news media has written articles about the coming glut of foreclosed properties that will further depress prices and prolong the recovery of the housing market. At least monthly, if not weekly, there is a report of the number of homeowners that are behind in their mortgage payments and the number of properties that are in some stage of foreclosure.
To date the flood of bank-owned properties has not occurred. In fact, many real estate agents who dealt almost exclusively in bank-owned properties have found their inventories sharply curtailed. The questions are: "Where are all these foreclosed properties and why have they not been put on the market?"
Perhaps the lenders are truly working with homeowners to modify loans and to adjust loan balances and loan payments to levels that are affordable for the property owner. I do know that many properties under threat of foreclosure have been put on the market and have sold as short sales. (Many more might if lenders did not take so long to process a short sale offer.) The bank-owned properties that have been put on the market have generally sold very quickly and their rapid turnover has not inflated the inventory. I have heard of some properties that are bank-owned, but the property owner has continued to remain in the property and the bank has not moved forward with offering the property for sale.
Another interesting anecdote came from friends who attended a foreclosure sale on the court house steps. It was attended by some 20-25 persons, many sophisticated investors. Several of the properties being offered that day actually sold on the court house steps thereby removing them from the bank's inventory. (Banks have become a bit more aggressive in reducing the amount of the first bid as an enticement for bidders. )
Are we going to be like the imaginary friends of "Godot" and wait for a no-show as far as the foreclosure glut? I am certainly intrigued with doing some research as to where the missing foreclosures have been hiding.
For the better part of this year and ongoing, economists and the news media has written articles about the coming glut of foreclosed properties that will further depress prices and prolong the recovery of the housing market. At least monthly, if not weekly, there is a report of the number of homeowners that are behind in their mortgage payments and the number of properties that are in some stage of foreclosure.
To date the flood of bank-owned properties has not occurred. In fact, many real estate agents who dealt almost exclusively in bank-owned properties have found their inventories sharply curtailed. The questions are: "Where are all these foreclosed properties and why have they not been put on the market?"
Perhaps the lenders are truly working with homeowners to modify loans and to adjust loan balances and loan payments to levels that are affordable for the property owner. I do know that many properties under threat of foreclosure have been put on the market and have sold as short sales. (Many more might if lenders did not take so long to process a short sale offer.) The bank-owned properties that have been put on the market have generally sold very quickly and their rapid turnover has not inflated the inventory. I have heard of some properties that are bank-owned, but the property owner has continued to remain in the property and the bank has not moved forward with offering the property for sale.
Another interesting anecdote came from friends who attended a foreclosure sale on the court house steps. It was attended by some 20-25 persons, many sophisticated investors. Several of the properties being offered that day actually sold on the court house steps thereby removing them from the bank's inventory. (Banks have become a bit more aggressive in reducing the amount of the first bid as an enticement for bidders. )
Are we going to be like the imaginary friends of "Godot" and wait for a no-show as far as the foreclosure glut? I am certainly intrigued with doing some research as to where the missing foreclosures have been hiding.
posted by shirley harry at 8:03 AM
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