"...Three of these counties contain the major bubble metros of Las Vegas, Miami, and Phoenix. This so-called “shadow inventory” will be thrown onto the market in the not-too-distant future and will clearly add to the glut of MLS listings.
It is very hard to determine how soon the banks will start to reduce this backlog of distressed properties. The servicing banks are clearly in no rush either to put seriously delinquent homeowners into default or to foreclose on those properties which are already in default. In December 2010, according to Lender Processing Services, 34% of seriously delinquent homeowners had not made a mortgage payment in at least 12 months. In early 2009, that number was only 10%.
The servicing banks can delay putting these homes into foreclosure to avoid having to write them down, but they will definitely be hitting the housing markets in these counties over the next few years.
How does this impact you? If you are an investor thinking of buying one or more properties in Miami-Dade County, for example, you need to know that 24.9% of all active first liens there were seriously distressed. This means that more than 91,000 properties are almost certainly going to be dumped onto the market. Will that exert downward pressure on prices? Absolutely.
If you are seriously considering investing in Miami-Dade, it is essential to factor in this huge and growing shadow inventory and be prepared for a further drop in prices of 10-20% or more. We’ll look at Miami-Dade in depth in the next issue..."
at http://www.minyanville.com/businessmarkets/articles/housing-market-shadow-inventories-real-estate/4/13/2011/id/33897?page=1#ixzz1JziLqNt8
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