Monday, November 24, 2008
The Xmas gift from the banks
It seems more and more banks are jumping on the "no foreclosures for the holiday" bandwagon. While I agree with the sentiment it just makes for a big spike in the numbers come January and February. All these programs are not helping the prices anyway, because fundamentally prices need to return to sane levels. But they sure are putting the brakes on the correction. In my search's I am getting about 1/4 as many new listings per day than I did a few months ago. The prices are still coming down although probably more slowly now, but man the pickings are getting slim.
It seems like every day I read about another bank freezing foreclosures or hyping some workout program. Every bleeding heart liberal congressman/woman is putting forth some bill or another to thwart foreclosures. But foreclosures make up 70% of the sales in the IE. What is going to happen to the sales numbers if the inventory of foreclosures starts to dwindle? Do they really think people will start buying overprices resales again? Not a chance, even if they wanted to buy AND could qualify for the amount the appraisals will probably not support the price.
And what will happen to the market if all these foreclosure freezes drag on? It doesn't take a quantum physicist to see that if you remove the foreclosures you remove the market (at least in California anyway). The California Association of Realtors must be caught between and rock and the unemployment line. They want to do everything they can to prop up the prices yet the only things selling are foreclosures. When most of your members are making a living off these properties is it really in the organizations best interest to try and stop foreclosures? Do you want high prices and no sales? Maybe they should think back to when that was the situation. They don't have very far back to look, it was only last year. Remember 2007, high prices = no sales!