Nick at the WSJ.com has an article (click here) about how the flow of foreclosures will drive pricing in the the real estate market. Some excerpts:
Regulators relaxed mark-to-market accounting rules, giving banks more flexibility in valuing certain real-estate assets and removing some of the impetus for banks to quickly foreclose.
Meanwhile, the Obama administration put in place an ambitious program to modify mortgages. The Home Affordable Modification Program has fallen short of its goals. So far, fewer than 500,000 loans have been modified, below the target of three million to four million. Yet the program served as a “closet moratorium” on foreclosures that stanched the flow of bank-owned homes to the market, said Ronald Temple, portfolio manager at Lazard Asset Management.
While more tax credits aren’t likely, policy makers could still attack the supply problem by, for example, taking foreclosed homes off the market and renting them out.
The lenders and servicers are going to keep coming up with ways to delay the inevitable. You can’t blame them, it is working well in their favor – the lenders/investors are spared the losses for now, and service fees continue to rack up.
Here is a comparison of the counts of local SFRs on the auction list:
|Town or Area||Dec ’09||Today|
It’s possible that fewer homeowners are in default, but it’s more likely that servicers aren’t pursuing foreclosures in earnest. I still think that if the servicers cut loose with more REO listings, the subsequent surge in sales could cause pricing to trend upward before too long. There are plenty of buyers, we need more well-priced inventory!