The Elephant in the Room Is Still There

Every once in a while, the elephant is mentioned but mostly these days I don't hear much talk of it. The elephant--the ever-ballooning inventory of foreclosed properties the banks are sitting on. Just as the housing market has been showing signs of stabilizing, looming over it is another wave of foreclosures poised to crash over it. Following the enactment of President Obama's home-stability plan, banks had delayed foreclosure proceedings on many properties as they worked on alternatives with homeowners. But the government-imposed moratorium on foreclosures is expiring and it's reasonable to expect lenders to start clearing that backlog. With an estimated one in five homeowner owing more on their home than it's worth (according to Moody's Economy.com), the prospect of increased foreclosure proceedings and the dump of those properties on a fragile market is scary. The silver lining: first-time home buyers and investors are finding good deals and buying. And the unknown: how will the government react to the threat of a flooding of the real estate market with foreclosures.

Comments

[Anne Rhea]

Realtytrac is a valid source as far as I know. The discrepancy between the Realtytrac number and those showing up in the multiple listing service goes to the heart of my post--namely, the banks are sitting on a growing inventory of homes they've foreclosed but aren't putting up for sale. And will there be a dump of bank-owned properties this fall? That's what many Realtors I talk to are concerned will happen. I'm hoping the government is keeping a close eye on this and will take measures to ensure banks release these properties in a responsible fashion.

[Jack]

Where can I find the total number of homes that are foreclosed? According to realtytrac, there are 300+ bank owned homes in Folsom whereas only 11 are currently on the market. Is realtytrac a valid source for the number of homes foreclosed? As for the government moratorium, I think it is 90 days that started in June. Can we expect the banks to unload the inventory starting in September?