- Image by joespake via Flickr
I try to find articles that paint a true a true picture of the real estate market. Everyone I talk to about real estate asks what it is going to take to make the market snap back. I read a lot of news and commentary, trying to find honest answers to some of the tough questions in real estate today. The value of home ownership has been undermined by the mortgage debacle, foreclosures, and what appears to be media advocacy of strategic default.
Here are some interesting articles:
Wall Street Journal article Key to Real-Estate Rebound: Solid Economic Growth
“The housing sector, weighed down by a glut of unsold homes, needs job growth to boost demand and curb the flow of delinquent loans into foreclosure.”
This is a comprehensive article about the many factors impacting the housing market: jobs, demand,housing inventory, foreclosures, politics. A must read.
2 Posts from Calculated Risk
Economics blog, Calculated risk excerpts some rather pessimistic stories about home prices, stressing the “shadow market of un-absorbed foreclosure homes, and goes into much more detail in Delinquencies and Distressed House Sales.
As a residential Broker, my greatest vexation is “un-absorbed” (unsold) foreclosures. Banks foreclose on properties, then demand that they be sold “as-is”. It doesn’t matter if the former owners stripped every fixture out of the house and kicked holes in all the walls before they vacated. So I have a buyer who is qualified for a loan who would like to get a good deal on a house. They find a foreclosure they like, but are shot down by their mortage banker who will not finance an As-is property, because the appraisers and underwriters always call for repairs. So the foreclosures sit there; the bank whittles the price until an “investor” buys the property, at a fraction of market value, dragging down the value of comparable properties in the area, and, house by house, converting the neighborhood from an owner-occupied neighborhood to a rental neighborhood. I can drive you down blocks in Memphis and ask you to pick out the blocks that are mostly owner-occupied or mostly rental, and you will have no problem doing so.
But there is a solution that would make foreclosures available to owner-occupants, save our neighborhoods, and make home ownership desirable again.
My very simple advice to banks on how they can rebuild the housing market, restore the American Dream, and be viewed as heros:
Banks! Change your perspective on your REO properties. Do appraiser and underwriter required repairs and sell your inventory of houses to the people who really want to live in them, not rent them out or speculate on them. Encourage owner occupants to make offers and work with them to get the deals done. You will probably make even MORE money, and people will love you for it.
What’s your opinion, as a banker, homeowner, home buyer or real estate agent? Please share your comments.
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[…] there are deals to be had. Click image for full reportThe 800 pound gorillaI have written about the shadow market – homes where the owners have defaulted, but the banks holding the mortgages have not moved […]