Foreclosures Projected to Triple Over Next Four Years (RE market, incentive, foreclosure)

[RobE]

The cheerleaders in the real estate industry won't want to hear this.

Salient quote:

So if you talk to people who oversee these assets, including people who work with the FDIC, you'll hear that there is an inventory of unrecognized losses being built up, in hopes that the underlying mortgages will turn around without the need for loss reporting. In view of the CRL foreclosure projections, all we can think is – fat chance.

As an aside, I was reading in one of the Florida papers that homeowners in the southern half of the state are a collective $62 billion underwater, that figure including the half of all current mortgages there are now for homes worth less than they were purchased for. And another big fall in prices is projected in the coming years.

It is still ugly out there.

[MN-Born-n-Raised]

The Realtor's on the street sees all kinds of activity and many refuse to believe that it will go down in THEIR market (it only goes down in other markets you see). As in, they really do believe that the bottom is here even though you can point to mountains of evidence that shows that there is more to come (and why) even in their "hood".

All they can see is the last three-to-four months of aggressively priced homes (in comparison to 2006) and they hear their phones ringing off the hook. Of course the phones are ringing for that $100K home and they will have 20 others waiting in line. I diverge.

In the end, I WANT the prices to stabilize for the good of all of us but I cannot find any data to support this other than information due to manipulated motivation. As in intentionally lower home supply by banks, subsidized 1st time buyers money, artificially lowered interest rates etc. I am trying to figure out what is going on with housing so I know what will happen with the economy (as well as when I should buy another home).

But there is nothing that I can point to that this economy is going the right direction once I look at the entire situation (other than the stock market going higher). If real estate has to heal before our country is healthy, we are in for a few more years of hurt.

[middle-aged mom]

Originally Posted by MN-Born-n-Raised

The Realtor's on the street sees all kinds of activity and many refuse to believe that it will go down in THEIR market (it only goes down in other markets you see). As in, they really do believe that the bottom is here even though you can point to mountains of evidence that shows that there is more to come (and why) even in their "hood".

Does it matter what any agent thinks?

Current supply and demand determine current market value.

Buyers, sellers and their respective agents who believe otherwise, don't close.

[MN-Born-n-Raised]

Originally Posted by middle-aged mom

Does it matter what any agent thinks?

Current supply and demand determine current market value.

Buyers, sellers and their respective agents who believe otherwise, don't close.

For starters MAM, I don't put you in this category. The OP mentioned that "the cheerleaders" won't want to hear this. I was answering that part of his post with the portion that you copied.

Many agents are in fact cheerleaders. They were cheerleaders in 2007, 2008, and now in 2009. So yes it matters what they think to many people's pocket book. If I pay for professional advice and hire an agent who says "now is a great time to buy that $400K home in AZ" and I don't do my own research, it can matter by tens of thousands of dollars considering this would be a 3rd home that I don't "need".

If people know the value will go down many will sit on the side-lines. If people know that it will go up that builds a sense of urgency that nearly all Sales people attempt to generate.

If an agent says "I don't know if the pricing will go up or down and I don't have a prediction" then that is a more honest answer.

[Delron]

Very interesting piece. Not surprising to say the least. And of course, chances of correction and becoming current on loans in default are extremely slim, I believe we've all seen the statistics on those, particularly via the Hope to Homeowners program and other such bailouts/moratoriums etc.

There can't be any significant percentage of bad loan correction without enormous principal rightdowns. Not saying I agree with such an option, just noting the reality of the situation. And the banks/debt holders are so much against that I see next to no chance of that happening.

That south Florida number is incredible. I believe I read via Mark Hanson that the average amount underwater that homes/mortgages (only for homesmortgages that actually ARE underwater, I believe) in California is either 100,000. It may have even been 200,000. I have to look it up. But it's an incredible number. No chance in hell the vast majority of those loans will be made good or last.

[Delron]

Originally Posted by MN-Born-n-Raised

In the end, I WANT the prices to stabilize for the good of all of us but I cannot find any data to support this other than information due to manipulated motivation. As in intentionally lower home supply by banks, subsidized 1st time buyers money, artificially lowered interest rates etc. I am trying to figure out what is going on with housing so I know what will happen with the economy (as well as when I should buy another home).

Yep, and even with all the market manipulation in a vain attempt to stabilize and resuscitate the overall RE market, all of that "stimulus" you've mentioned resulted in a mere blip uptick over last year's awful sales numbers, seasonally adjusted or otherwise. We've thrown billions upon billions (trillions actually) at the housing market via interest rate manipulation, bailouts, buyer tax credit incentives and you name it, and for what? An insignificant, miniscule uptick in the year over year sales numbers.