Fewer Foreclosures, Real Estate Crash Over?

Well, not quite.

Foreclosures are down based on a recent report from Realtytrac. But, not for the reasons you would hope. Not because there are fewer defaulting homeowners or fewer already foreclosed homes that need to be put for sale.

There are fewer foreclosures because the banks are slow to foreclose because they don’t want more REOs to manage and sell. Based on recent reports there are nearly 4,000,000 homes controlled by the banks that will need to be sold.

Thus, recently prices have begun declining again even though the inventory for homes available for sale is being kept relatively low compared to the number that should actually be available to buyers.

Even though homes sold are only about 90,000 per month, inventory is growing by around 60,000 per month. So the homes sold each month would have to increase by two-thirds just to keep up with the growing inventory — not to begin to cut the 3.35 million homes in the shadows. To conjure up enough demand to meet 150,000 sales instead of just 90,000, home prices would almost certainly have to fall faster.

Baytown real estate