Another foreclosure wave?

The next wave of foreclosures are just on the horizon…and that wave is BIG! According to Dean Baker, the co-director for the Center for Economic and Policy Research in Washington: “There’s a huge supply out there. The foreclosure process can take a long time. When it comes to (the housing recovery), we’re not home yet.

Some studies estimate that there are about 7 MILLION properties destined to go into foreclosure. These homes largely represent loans that are delinquent but have not yet become foreclosure sales.
The “time lag” between when a borrower stops making payments and the home is actually re-sold by the lender can be up to 2 years or more, for varying reasons:

• Self or Govt. imposed moratoriums…this happend last year around the holidays, and I expect that it will happen again this year
• Understaffed, undertrained lenders
• Loan modification being attempted prior to foreclosure
• Internal “asset protection” strategies…bank don’t have to write down the value of the home (asset) as long as it is on the books

So, although the local housing numbers look like they are improving...be careful, both if you are a seller or buyer of any real estate here in Palm Beach County, Florida. The expanded and extended tax credit is good...and bad. It is giving people a false (and temporary) view of the market.

Buyers need to be well educated about WHY they are buying, WHAT they are buying and what their goals with the purchase is.

Sellers need to also remember WHY they are selling and be aware that this apparent improvement in the market may not last.

Call or email me if you'd like to discuss this further from any viewpoint. Thanks for your time in reading our posts.

Steve Jackson