Flood of foreclosures: It's worse than you think
Banks are moving slowly to list repossessed homes for sale, which could mean that housing inventory is even more bloated than current statistics indicate.
NEW YORK (CNNMoney.com) -- Housing might be in worse shape than we think.
There is probably even more excess housing inventory gumming up the market than current statistics indicate, thanks to a wave of foreclosures that has yet to hit the market.
The problem: Many foreclosed homes and other distressed properties that are now owned by banks have yet to be listed for sale. The volume of this so-called 'ghost inventory' could be substantial enough to depress already steeply falling prices when it does go on the market.
"That's not good news," said Pat Newport, an analyst with IHS Global Insight. "[Excess] inventory is the biggest problem in housing these days, and it leads to lower housing prices, which leads to more foreclosures."
RealtyTrac, the online marketer of foreclosed properties, recently discovered that it has far more foreclosed properties listed in its database, which the company compiles using courthouse records, than there are listed in the multiple listing services (MLS) maintained by real estate agents.
The phenomenon of a growing ghost inventory doesn't promise to get better anytime soon, as long as the rate of foreclosures continues to ravage the market. There were more than 3.1 million foreclosure filings in 2008, according to RealtyTrac.
Said Sharga: "I don't see how we can avoid another 3 million in 2009."
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You also need to add a lot of the houses purchased the last couple of years and then the houses that will be purchased this year.
ReplyDeleteAnyone buying a house now is a fool
I just can't understand why the people (us) don't organize and embrace the power we have, numbers! If we think a certain bank doesnt deserve our tax dollars and should fail, then we make it known and withdraw our money! The people have the power!!
ReplyDeleteWhat amazed me about this incredible bubble was that no one bothered with the math.
ReplyDeleteFamilies earning 50-75-100K a year should not be buying 400-600-1 million dollar homes, no matter what. The numbers will never add.
Also, in some areas you have HOAs, secondary HOAs, and sky high taxes.
People should never be paying 3-4-5K a month for housing unless they make serious change, like 250K and above.
For most of us, the numbers don't will not/and never would work.
Imagine buying a 500K home. IF you pay it off in the 30 years, your total cost could be:
500K x 2.5 for principle and interest = 1.25 mil
If you have HOAs, $150/month x 360 months = 54,000 Keep in mind HOAs will continue to be paid after 30 years, for as long as YOU stay and then the next poor schmuck gets the bill.
Running total = 1.8 million
Taxes = lets go generous at 1.5%, which is 7,500/year x 30 years + 215,000
Running total = $2 million for arguments' sake. Also, taxes will continue to be paid after 30 years.
Insurance and maintence/upkeep? Why bother?
Everyone gets the point.
For most people, even the 75k-100k crowd, anything more than 250K, maybe 300K is pointless, unless you have a serious down payment, like 50%.
With my example, you will never sell that home for 2 million, and if you did, since the original price was 500K, you get reamed on your income tax.
Bottom line is = people got suckered, greedy, stupid, whatever you want to call it.
Whatever it was/is, this house of cards has a long way to fall. Pun intended!
Hey Folks
ReplyDeleteNo one is mentioning the alt a and option arm crisis thats is about to unfold and will only peak in 2010.You aint seen nothing yet.Wait till these mortgages come due and default.Thats when TSHTF.
Brother can you spare a dime?
ReplyDeleteAnon, 60 minutes did a piece on the coming mortgage default that will occur in 2011. MUCH bigger than what is happening now. Look for it at the side bar>>>>>>
ReplyDeletewell, the newspaper will make lots of money!
ReplyDeleteno home..... how about the "Hoover blanket"