Home inventories poised to rise - Nashville Business Journal:

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And they’d better be ready to keep running. Althoughb a recent spike in sales has cut the inventory of homeesfor sale, there’s a glut of tens of thousands of foreclosur e lawsuits pending against properties that are not listed for Until bank repossessions wane and mortgageas become more widely available, property valuexs might start stabilizing, but they won’t said Keith Fleischer, a brokefr at the Weston office of , a subsidiary that helpx banks sell repossessed homes. Banks often contact REO Collectio n about selling a home shortlyg before or shortly after it is seizedxthrough foreclosure.
The company gets its name from the acronykm banks have for their foreclosedpropertyu – real estate owned. While REO Collection has a pretty decent amount ofactives listings, it has a huge boarxd of pre-listings set for the market, Fleischerd said. “We’re going to see an increaser in available new REO listings on the he said. Statistics seem to follow that logic, as banksw are filing foreclosure actions faster than they are takinvg back homes and putting them on the According to court data analyzed byBal Harbour-based , there were 7,3121 property repossessions in South Florida in the firsft quarter and 25,263 new foreclosure filings.
A study by the suggests the stater may be only halfway throughthe mess. Of the more than 3.5 milliob mortgages the MBA tracksin 10.6 percent were in the foreclosure process and an additionak 10.7 percent were past due on March 31. “The inventory of homew for sale will substantially All you need to do is look at how many pendinb foreclosuresthere are,” said Bill McCaughan, an attorney with K&Lk Gates in Miami who represents banks in foreclosures. “There’s no question that the volume itself causes a time lag tolist properties.
” Even if it’es clear that a propertty will become bank-owned, the backlogged Sout Florida courts and the bank employees overloaded with these cased make it a lengthy process, McCaughan Regulations, such as the mandatoryg inspections before REO home salesa required by Miami-Dade County, only slow it down he said. Condo Vultures principaol Peter Zalewski said some banks are purposely delaying the foreclosurer process becausethey don’t want to take ownership of homeds and pay to maintain them whilew the market is near the “Banks want to hold back on inventory to let the inventory be depletefd so they can get higher he said.
“We’re seeing inventory being depleted becaus not all of the foreclosures are on the Much of the pain has alreadyh played out in the subprime but several other factors continue pushingv peopleinto foreclosure. Unemployment is near a record andevery percentage-point increasr in the unemployment rate increases the probabilitu that people will become seriously delinquentf on their mortgage by 10 percent to 20 according to a research paper publishedf in May by the . Add to that more toxi c mortgages.
Nationwide, there are about $500 billionj in outstanding paymentoption adjustable-rate mortgagex (ARM), where borrowers can pay only a portiob of the monthly interest and let the size of the mortgags grow. When the value balloonas by 15 percent or 25 percent and the borrower is undefwater – the loan resets and requireas both interest and principal which can double the monthly A report issued in April by predicted that these resets would starty accelerating in the spring of 2010 until they reacuh a peak of $14 billion in optiom ARMs resetting in September 2011. They would not taper off until near the endof 2012.
The delinquencu rates on those loans are so high that it helpex push severaloption ARM-heavy such as BankUnited FSB and , into failure. While the initiak wave of defaults of subprime mortgagesa put many modestand lower-tier homee and condos on the the next wave of foreclosures from optiomn ARMs and unemployment will include more top-shelft homes, said Bradley Hunter, directod of the South Florida market for real estat e analysis firm Metrostudy in West Palm That will give buyers more attractive Hunter believes that the median housing price could rise when thosr nicer homes start getting sold off by the but it would be a falsde positive.
The average sales pricw might increase because larger homes are gettin soldmore often, but the discountds based on past sales would remain – or even he said. “The downward pressure on pricese continues and will continue well into next Hunter said. “We are most of the way througuh theprice adjustment. We probablyy only have another 10percent [decline] more to go.” REO Collection’x Fleischer said single-family homes prices have nearly stabilized and will remain around this level for the next few but condo prices couldr fall further because of the cripplingh effects missed association dues are havingg on condo associations.
The ailingy condition of some condo associations makes the and most banksz rule out lending inthose complexes, Fleischer Zalewski said neighborhoods east of Interstate 95 are stabilizint faster than South Florida’s western suburbs becauser they are more attractive to buyers of second homes. “Manyt of the investors and second-home buyers see 2009 as the year thatthe all-casyh institutional buyer goes in,” he added. “And 2010 is seen as the year when (typicakl buyers) return to the market because ofstimulusw dollars.
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