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.
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“These foreclosures are occurring in relatively healthy local markets”
With a hat tip to the information ocrenter tracks in his blog, I can safely say that he’s, once again, full of it. The markets with the highest numbers (and percentages) of foreclosures are exactly the same markets with the highest inventories.
Maybe his definition of “healthy” means a higher ratio of vegetarians??
“These foreclosures are occurring in relatively healthy local markets”
I’m just about to be laid out on the slab with some incurable financial disease, but hey, the town I live in had the lowest rate of cold & flu virus in the state last winter…
so I’m good!
Somehow, DL’s description of it seems so much nicer than my metaphor.
Asset Hunter-
I thought there’s a case to be made for defining the health of a market by the number of foreclosures, so he managed to confuse me altogether.
I hope DL does something like volunteer in nursing homes in his spare time- you gotta admit, no one can beat him for having a positive attitude, he’d be great.
They will sell quickly as they will be discounted and sold at auction since banks don’t particularly want to own anything besides interest payments.