The May issue of Realtor magazine is out. It includes an "economic report" by the National Association of Realtor’s chief economist, David Lereah. I thought I would share just a bit of his "Subprime Reckoning" article:
Now, about one in eight adjustable-rate loans (a quarter of which are subprime) totaling some $325 billion are in foreclosure, many in high-cost states like California. More trouble could be on the way. A bit more than $300 billion in subprime ARMs is due to reset during the next two quarters. Most lenders will try to work these out, but in some cases the loans will be foreclosed and the houses put on the market, adding to already ample supply and holding down prices.
Without sugar-coating reality, there is some good news: These foreclosures are occurring in relatively healthy local markets, with solid economic activity and job growth, improving the prospects of the properties selling without too much delay.
So once the properties are foreclosed on, they should sell quickly? I’m sure the former owners of these REOs will find this "good news" a great comfort.