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A survey today said that U.S. home buyers are less willing to buy foreclosed properties than they were six months ago. A drop in demand for foreclosed properties exacerbate current housing price declines.
The survey said that 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."Shadow inventory includes houses that banks now hold but have yet to put up for sale.
Double-digit unemployment will push more owners into foreclosure, further destabilizing the housing market and pressing prices down another 5 to 10 percent, said Flint.
So with people not even buying the low-priced foreclosures, it looks like a disaster when the tax incentives run out next year.
For me, I have to make this sale work and then I may decide to rent until things stop crashing... if they ever do.
I agree with the report and it's the one I've been more or less basing seller strategizing on. Things will stop crashing, but it may take 2 or 3 years. I suspect the number of homes sold will level out over the next year or two, but price will lag behind so it will be 2-3 years before it levels.
We've already decided to rent for at least two years once this deal closes. Prices here aren't falling like others but they are still dropping little by little. I don't like renting, but then again I don't like losing money either....I think I'll rent for less of a risk.
I don't think you'll find the best deals now are any better than the best deals you'll get in the coming year or 2, there'll just be a few more of them around. The majority of the loan modifications will still be short sales or foreclosures down the road and it will have proven to be a huge waste of government money funded by the taxpayers.
From the Wall Street Journal about Loan Modifications:
Here are the facts:
75 billion dollar incentive program for lenders enacted in February 2009.
Only 31,000 people have achieved a permanent loan modification in that time.
Two mortgage companies, Ocwen Financial and GMAC account for 36% of all permanent modifications.
Chase has 135,686 trial modifications with only 4,302 permanent modifications in place.
29% of the people who are in trial modifications don’t make the new required payments.
Bank of America has 156,864 trial modifications with only 98 permanent modifications.
The underlying feeling that a mortgage modification will save many borrowers the challenge of short selling a home or foreclosure is unfounded. The facts speak to the contrary thus far.
I hope we are all here in 2-3 years. I have half a mind to postpone my search until there are signs of improvement both in the economy and corporate/government control (reduction) and a clear restoration of our Constitutional rights AND there is no longer danger of a Tsunami caliber Natural Disaster or a global government controlling our every move. Futurists are saying that as early as next month we could see dramatic indications of turns for the worse. The Millennium Prophecy
I'd love to ignore it ( and there are tons of websites/ experts like these who agree) and pretend that nothing is going to happen, but what if I'm wrong? Certainly what is going on in Washington doesn't give me any reason to hope for any turn around for the better. : (
Please, I wish someone could say it isn't so... : (
Who is the source of this survey? Reported by Reuters, the survey was commissioned by Trulia and RealtyTrac.
Who was surveyed? It was a survey of Americans.
What strategies were used to validate the responses?
God strike me dead, but I agree with Brandon. A good deal today is not going to be any worse than a good deal in 2-3 years, even if the market declines further. The only way prices go significantly lower is in an armageddon scenario, and we're not there. It is still *possible*, but not in 2010. Here's a simple but effective index for tracking what the economy and markets will do:
Notice it is trending down after being up most of 2009.
MaM, current events are foretelling exactly what happens next, IMO. The near sovereign debt default in Dubai, the anyday sovereign debt defaults in Greece, Spain, Latvia, Ukraine, Lithuania, Moldova, Romania, and a couple other countries will cause a crisis that affects our banking system in the US as the music stops, and every bank, hedge fund, financial institution, and government has to find cash to cover obligations to other indebted nations and institutions. And if it's not these foreign nations, it will be something else nobody is expecting (but should've).
Guy - you are very much the joe six pack for the new reality of housing. Many of those who cannot afford their homes are already out. Even amongst prime borrowers who face loan resets and are underwater, I think they just rent their home out or find a way to make their mortgage payments. Inventory should dry up, prices should find resistance at their bottom, but the number of comps will be down in many places making valuations difficult, the potential for higher capital costs (interest rates) will discourage some prospective home buyers.
The impact will be felt by retailers, CRE, banks, and to some degree businesses who find they are unable to hire employees with specific skill sets because they are tethered to a mortgage someplace where the job isn't.
We've already decided to rent for at least two years once this deal closes. Prices here aren't falling like others but they are still dropping little by little. I don't like renting, but then again I don't like losing money either....I think I'll rent for less of a risk.
Price is important but if you are holding out over a few grand you are better off buying now while interest rates are amazing. Vacant homes that are on the market now are falling into disrepair. I don't think you are doing yourself any favors by waiting, after all rent is completely wasted money, you get none of it back ever - gauranteed.
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