Diana Olick of CNBC did an article last week warning potential homebuyers about some of those foreclosure “bargains” out there. Certainly many starry-eyed Bob Villa wannabes have purchased foreclosures thinking they’d turn a shack into a palace with a little paint and carpet and have ended up over their heads. Olick goes over some of the things that a would be foreclosure purchaser should look for.
This does beg the question though- what about those homes that aren’t worth purchasing? I asked L how many worthless [Or close to it.] properties were out there. He said,
Tons. That’s one of the major problems with the housing market now. Even the decent ones like J____’s. [A former neighbor.] His place has been slowly deteriorating as no one las lived in it for nearly two years. Things have started going like the seals and gaskets on the A/C, the water heater, and the plumbing. No one’s done anything to the pool, or the pond. Many other homes have hail damage that was never turned in to insurance companies and even more have now been stripped.
How many of these “shadow inventory” properties are being maintained by the banks? I spoke with one Austin, TX realtor who told me that one of his clients hasn’t made a house payment in over a year- and he has yet to contacted by the bank about it. It makes me wonder how many homes are out there in foreclosure limbo– where the owners are long gone, but the bank hasn’t even checked up on it.
It seems likely to me that many homes are likely to end up being leveled– not because of some plan to reduce the inventory, but because the home is simply not worth fixing. Last year S&P estimated that it would take three years before shadow inventory was gone. What kind of shape are many of these homes liable to be in if they sit without maintenance for three years?
There are houses out there that aren’t worth saving. Even banks are walking away from properties, not finding it worthwhile to foreclose. These properties are going to be a detriment to their communities and will need to be dealt with– with luck, at the expense of their owners and/or lenders. Why do I have a feeling though that somehow, the bill for the “bulldozer bait” [Thanks L- the term is perfect.] will be sent to the taxpayers?