Will the results impact our local real estate market?
1. Hopefully the politicians will start looking at foreclosure as a solution, not a problem. From CNNMoney.com yesterday:
The Obama administration is singing a different tune about foreclosures. A year ago, officials focused on stemming the foreclosure tide. Now they are touting the need for foreclosures to rebuild the housing market.
Last week Phyllis Caldwell, head of the Treasury Department’s Homeownership Preservation Office, told a congressional panel that “an important part of ensuring longer-term stability in the market is to enable properties to be resold to families who can afford to purchase them.”
And White House Press Secretary Robert Gibbs last month told reporters that without sales of homes in distressed areas the “recovery in the housing market stops. It’s frozen.”
The shift in rhetoric signals the Obama administration is recognizing that its loan modification program is foundering, experts said. Also, it is acknowledging that banks must address their swelling ranks of delinquent loans.
The political shift should help to reinforce these thoughts with the administration. There’s no foreclosure tsunami in sight, but by being more foreclosure-friendly, the-powers-that-be could increase the REO inventory and HELP the market by providing more well-priced homes to purchase. Please open the faucet a turn or two!
Pushing more foreclosures through might help stop people from defaulting – if the free rent program wasn’t so attractive, hopefully the poeple who can afford to stay would re-consider.
2. We’ll probably see mortgage rates stay ultra-low for the foreseeable future; under 5% for the next year. Turning Fannie/Freddie into a private-enterprise is 2-3 years away at best, so mortgage availability will be dependent on the taxpayer-supported GSEs providing a secondary market. It appears that the federal government will comply for now.
3. The cheap money should cause more buyers to want to engage, making an already-competitive marketplace even more challenging. If it becomes more obvious to politicians/servicers how difficult it is to find a decent house for a reasonable price, then maybe they try to unload inventory.
4. Unemployment, consumer confidence, economy? All have been sideline concerns that haven’t caused much panic among sellers and their pricing. For many who are selling, this will be their last hurrah of homeownership – so they think they should milk it for top dollar. Most chase their market down, selling for less, not more – or not at all.
Other changes that could have impact:
Sellers are being forced to re-consider their addiction to the comps, and look at the reality – the house is not selling. There are fewer comps, and they are less likely to mean something – just because somebody paid that much for a house a mile away, doesn’t automatically mean that another buyer will pay that for yours.
Servicers could get more proficient. No signs of that happening yet, but if they could streamline short sales or pre-approve pricing of them, we could see some real market clearing.
Realtors are doing NOTHING to help the situation. There are a few more generic radio and TV ads, but no real help from which consumers could benefit. Plus, Zip Realty announced yesterday that they have abandoned their salaried-agents nationwide, in favor of independent contractors. Zillow never made it into the sales arena, so it’s down to Redfin to chart a new course for agent-client interaction. Redfin’s website is their ticket – but only because the NAR and assorted villians refuse to create a powerful, all-encompassing website to dominate the space, instead of the half-baked realtor.com. In other words, expect more of the same nothing-burgers from agents, and watch them drop like flies – or be replaced by new blood.
There could be spurts in either direction. We could see a surge of sales activity in the hot areas like Carmel Valley, or hit spots where the demand has been exhausted, and lower pricing is the only answer. But it’ll look pretty stagnant to most for the next few months.