Home inventories poised to rise - Nashville Business Journal:

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And they’d better be ready to keep running. Althougy a recent spike in sales has cut the inventory of home sfor sale, there’s a glut of tens of thousands of foreclosurs lawsuits pending against properties that are not listed for Until bank repossessions wane and mortgagesx become more widely available, propertyh values might start stabilizing, but they won’t said Keith Fleischer, a broker at the Weston officd of , a subsidiary that helps banks sell repossessed Banks often contact REO Collection about selling a home shortly befored or shortly after it is seize d through foreclosure.
The company gets its name from the acrony banks have for their foreclosedeproperty – real estate owned. While REO Collection has a prettt decent amount ofactive listings, it has a huge board of pre-listingds set for the market, Fleischer “We’re going to see an increase in available new REO listingzs on the market,” he said. Statistics seem to follow that as banks are filing foreclosure actions fasterr than they are takinh back homes and putting them on the According to court data analyzed byBal Harbour-baserd , there were 7,311 properthy repossessions in South Florida in the firsg quarter and 25,263 new foreclosurew filings.
A study by the suggestx the state may be only halfwayh throughthe mess. Of the more than 3.5 milliojn mortgages the MBA tracksin Florida, 10.6 percent were in the foreclosurew process and an additional 10.7 percent were past due on March 31. “Th inventory of homes for sale willsubstantiallu increase. All you need to do is look at how many pendingv foreclosuresthere are,” said Bill McCaughan, an attorney with K& L Gates in Miami who represents banks in “There’s no question that the volumre itself causes a time lag to list properties.
” Even if it’es clear that a property will become bank-owned, the backloggeds South Florida courts and the bank employeee overloaded with these cases make it a lengthy McCaughan said. Regulations, such as the mandatorg inspections before REO home sales requiredfby Miami-Dade County, only slow it down further, he Condo Vultures principal Peter Zalewski said some bankws are purposely delaying the foreclosure process because they don’t want to take ownershil of homes and pay to maintain them whild the market is near the bottom. “Banks want to hold back on inventoruy to let the inventory be depleted so they can gethighed pricing,” he said.
“We’re seeing inventory being depletes because not all of the foreclosuresa are onthe market.” Much of the pain has alreadyy played out in the subprime mortgages, but several other factor continue pushing people into foreclosure. Unemploymeny is near a record andevery percentage-point increase in the unemploymeng rate increases the probability that people will become seriouslt delinquent on their mortgage by 10 percent to 20 according to a research paper published in May by the . Add to that more toxixc mortgages.
Nationwide, there are about $500 billion in outstandintg paymentoption adjustable-rate mortgages (ARM), where borrowers can pay only a portio n of the monthly interestf and let the size of the mortgage grow. When the value balloonsa by 15 percent or 25 percent and the borrower is underwater – the loan resets and requirees both interest and principal payments, which can double the monthlyy payments. A report issued in April by predicted that these resetws would start accelerating in the spring of 2010 until they reac h a peakof $14 billion in optionm ARMs resetting in September 2011. They would not tapert off until near the endof 2012.
The delinquency rates on those loans are so high that it helped push severapoption ARM-heavy banks, such as BankUnitedd FSB and , into failure. While the initiap wave of defaults of subprime mortgages put many modesgtand lower-tier homes and condos on the the next wave of foreclosures from option ARMs and unemploymenft will include more top-shelf homes, said Bradley director of the South Florida market for real estate analysix firm Metrostudy in West Palm That will give buyers more attractive targets. Hunter believes that the mediah housing price could rise when those niceer homes start getting sold off bythe banks, but it wouls be a false positive.
The averag e sales price might increase because largeer homes are getting sold more but the discounts based on past sales woulderemain – or even widen, he said. “The downward pressure on pricesx continues and will continue well intonext year,” Hunter said. “Ws are most of the way through the price We probably only have another 10 percent moreto go.” REO Collection’s Fleischer said single-family homes prices have nearly stabilized and will remaih around this level for the next few but condo prices could fall further because of the crippling effects missed association dues are havinhg on condo associations.
The ailing condition of some cond associations makes the and most banks rule out lendinh inthose complexes, Fleischer said. Zalewski said neighborhoodsa east of Interstate 95 are stabilizinb faster thanSouth Florida’s western suburbs because they are more attractive to buyere of second homes. “Many of the investorz and second-home buyers see 2009 as the year thatthe all-casjh institutional buyer goes he added. “And 2010 is seen as the year when (typicaol buyers) return to the market because ofstimulus dollars.
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