A conservative news and views blog.

Location: St. Louis, Missouri, United States

Friday, October 21, 2011

Housing Market a Long Way from Home

Timothy Birdnow

The housing industry is still in ruins - and it won't be getting better any time soon!

According to Carrie Bay at DSNews:

"Five years into the housing crisis, and foreclosures remain elevated.

We’ve seen temporary lulls in home repossessions that coincided with the implementation of new state and municipal mediation efforts, moratoria enacted as federal programs ramped up, and suspensions of filings as lenders initiated paperwork reviews last fall.

But by all accounts, the foreclosure tide has yet to ebb, and the massive supply of bank-owned homes building over the last half-decade has taken its toll on market fundamentals.

What’s become of all those properties seized by banks? CoreLogic delved into the stats to find out. The company’s analysts took a closer look at the post-foreclosure outcomes of properties since 2006.
In 2006, just as the housing bubble popped, over 355,000 properties proceeded through a foreclosure auction. CoreLogic’s data show that approximately 34 percent (122,000) were successfully bid on by an investor. The remaining 66 percent (233,000) went back to the banks as REO properties.

Of the properties that went into REO, CoreLogic reports that 90 percent (210,000) were liquidated as REO sales to third-party buyers. Nearly half of those sales took six months or less to complete, but 21 percent took 12 months or longer.

Nearly 10 percent (23,200) of the properties added to the REO inventory in 2006 remained in REO as of mid-2010, according to CoreLogic’s analysis. Similarly, of 2007’s REOs, 10 percent have never left the banks’ books."

End excerpt.

This is clearly the Winter of our Dispossess.

Government policy made this mess, and government policy has not changed in any fundamental way. Interest rates are still too low to encourage lending. Programs are still out there to prevent redlining (not lending for properties in bad neighborhoods), to force banks to make loans to unqualified people. New programs were designed to save borrowers - at the expense of the banks. With the loss of home values, distressed borrowers cannot sell their properties without having to bring large sums of money to closing - and walking away is still too easy.

This thing is a long, long way from home.

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