Wednesday, February 17, 2010
Home Prices Head D to the own
Millions of foreclosures are expected to keep downward pressure on home prices over the next several years, according to two new studies.
One study, conducted by John Burns Real Estate Consulting Inc., estimates that five million homes and condos currently delinquent are sailing toward foreclosure.
This so-called “shadow inventory” will wind up on the market with the rest of the unsold homes out there, adding about 10 months of unwanted sales stock.
In Orlando, the shadow inventory is a staggering 27 months of sales; it’s 24 months in Miami and 18 months in hard-hit Las Vegas.
Of course, banks are doing their best to keep most of these homes off the market for as long as possible to avoid flooding the market.
But most loss mitigation efforts like loan modifications aren’t expected to hold up, with as many as 70 percent re-defaulting over time, according to the S&P study.
The same study said loan servicers seemed to have exhausted the supply of potential candidates for loan modifications and will find many loans are “unredeemable.”
This could push banks and lenders into offering more robust foreclosure alternatives such as short sales and short refinances.
But even so, many, if not all of these measures are simply delaying the inevitable, which is a larger housing inventory than the numbers indicate.
Any questions or concerns don’t hesitate to contact me, Gene Neal your Mortgage Expert.
Tel (631) 687-3510 Ext. 101
Fax (631) 687-3513