Thursday, April 29, 2010

1.6 Millie

Barclays Capital expects 1.6 million distressed sales of homes this year, according to a report in the WSJ.

These “distressed sales” will mainly be in the form of foreclosures and short sales, and will make up roughly 30 percent of all home sales this year and next.

In 2011, the same number of distressed sales is expected, followed by a slight decline to 1.5 million in 2012.

Last year, the bank said such sales totaled 1.5 million.

Barclays currently estimates that banks and mortgage investors such as Fannie Mae and Freddie Mac own 480,000 homes – that number is expected to rise over the next 20 months and peak at 536,000 in January 2012.

However, there’s also the so-called shadow inventory, which they measure by tallying homeowners 90 days or more overdue on mortgage payments or already in the process of foreclosure.

As of the end of February, a startling 4.6 million households were in that category, though not all of them will lose their homes thanks to loan modifications and other loss mitigation efforts.

At the same time, you need to factor in strategic default, which includes borrowers that may be current but thinking about walking away.

Barclays estimates that home prices will fall another three to five percent on average over the next couple years.

You can reach me, Gene Neal at 877-276-6400 Ext 101.