However, I believe foreclosures and short sales will increase more dramatically as we begin 2014.
In a recent Wall Street Journal article:
“Nationally, Barclays estimates that the number of bank-owned properties will decline a bit more this year, before accelerating next year to a peak of around 575,000 in early 2014.”
Pricing of homes depends largely on ‘supply and demand.’
In our area, there are 11 months supply of inventory on the market. The norm as you can see by the chart is 5-6 months.
In many parts of the country, existing housing inventory has dropped to historic norms in the last few months. However, an inventory of distressed properties (foreclosures and short sales) will be coming to market this year.
This inventory has been delayed for over a year as the Federal and state governments crafted an agreement with the five largest banks and mortgage servicers to establish a roadmap for how a foreclosure must be properly completed.
That agreement, the National Mortgage Settlement, was reached two weeks ago.
What Impact Will the Agreement Have on Foreclosures?
Brandon Moore, chief executive of RealtyTrac, explains:
“The settlement sets forth clear guidelines for lenders and servicers to follow when foreclosing, which should allow them to push through some of the delayed foreclosures from last year.”
How Many Foreclosures Could We Be Talking About?
Mark Vitner, a senior economist at Wells Fargo Securities tells us:
“The settlement helps the housing market in the long run because it allows banks to proceed with millions of foreclosures that have been stalled.”
What will this mean to home prices?
As this inventory comes to market, it will impact prices in two ways:
1. It will bring to market discounted competition for buyers
2. It will impact the appraisal values of all homes in the area.
There is a window of opportunity currently which sellers should take advantage of. Waiting until later this year will not guarantee a higher sales price. If anything, in many regions of the country, it probably guarantees the exact opposite.