We’ve seen some great sales numbers this past year in some housing markets due to investor interest in purchasing foreclosures. Phoenix is a great example. If CNBC is correct, the foreclosure mania might be losing it’s luster: [Hat tip L!]
US home buyers are less willing to buy foreclosed properties than they were six months ago, citing risks like hidden costs, but demand could grow because of the government’s expanded tax credit, a survey showed on Tuesday.
A continued drop in demand for the glut of foreclosed properties would add a fresh layer of pain to a housing market just emerging from a three-year nosedive.
The percentage of Americans at least somewhat likely to consider buying a foreclosed home fell to 43 percent in November, sharply below May’s 55 percent, according to a survey by Harris Interactive.
The survey was conducted Nov. 5-9 on behalf of Trulia.com, a real estate search engine, and RealtyTrac, which tracks foreclosures.
Buyer expectations are becoming more realistic, Trulia Chief Executive Pete Flint said on a conference call.
Next year "government interventions will start to disappear, shadow inventory will hit the market and mortgage rates will start to rise" to around 6 percent from under 5 percent, he said. "We’re in a false state of stability."
It’s going to really be tough on the market if buyers aren’t in the mood for foreclosures, because there are going to be a lot of them:
The Mortgage Bankers Association is reporting some 7 million home loans in default, creating what some analysts have called a “shadow inventory” of foreclosures being held by banks.
“We’re looking at numbers that are somewhat hyperbolic, certainly breathless,” Sharga said. “Of the delinquent loans, the ones that will probably go back to the bank are somewhere in the neighborhood of 2.5 million. That’s the shadow inventory that will gradually be making its way to the market over the next three years.”
My former landlady bought a foreclosed property back in 1998. Property had two houses on it, and, boy, did they need work.
Took her the better part of a decade to get them back up to snuff. Even though LL was quite handy, she had to fork over quite a bit of money for building materials.
Needless to say, she isn’t the go-to gal for cheerleading about the great deals one can find in foreclosures.
BTW, Igor’s using the word she was fond of using when she found yet another problem to fix at her foreclosure: rats.
Perhaps they drove around “anytown USA” and saw sign-shakers and baloons advertising “reduced rents” and “move in specials”. . .SoCal seems to be one big Macy’s sale on apartments these days, and my friends in Las Vegas say its the same.
Reality has indeed set in, as it likely will in the 2010 stock market. . .I wouldn’t expect another big runup there anytime soon. . .we will be lucky to hold our own next year. . .the Fed has to start increasing rates sometime in the next 12 months!
Mark, the simple mention by the Fed that they are wavering on interest rates is my signal to get out of the market. It’s been a nice run up for those who timed it. PPI up 1.8% in November, but consumer prices are flat? How long until those costs are passed along to consumers? Duh.
Although, the rules are changed daily by our overlords and we probably don’t even know what the game is. I guess it’s conceivable the Fed can hold down interest rates until we move into our global currency, then who knows what the consequences will be.
s.m. -
This is the game, and has been since 7/7 ‘08 (hat tip to twist and her helpers for finding this one) …
“Big Decision Looms on Fannie, Freddie”, by Nick Timiraos and James R. Hagerty, WSJ / Yahoo Finance, December 16, 2009.
The new administration has the delicate task of providing all “aid” short of “help” to Agency Debt. They’re squeezed between the rock of the an agencies haircut and the hard place of doubling the size of America’s nominal national debt. Either denouement immediately ends their ability to magically finance new bailouts, not to mention ending the dollar’s reign as the world’s reserve currency.
In retrospect that was rather mischievous of me re-posting Bill’s proposal about GSE sub-debt holders the other day. America’s worthy community bankers would seem to be involuntarily propping up the US situation in much the same way that Canada’s ABCP victims subsidized our country’s banks, … “It Gets Complicated”
If “The Mortgage Bankers Association is reporting some 7 million home loans in default” then let’s just hope buyers are not getting less excited about foreclosures.
If the sales numbers this past year in some housing markets does stick, then it should be ok.