Saturday, November 17, 2007
The more time that I spend showing buyers foreclosed homes, the more that I’m beginning to see that there is a glut of foreclosed houses on the market. By that I don’t mean just that there are a lot, we all knew that; but that there are more than there are buyers – at any price. I suspect that is because a lot of speculators who were buying up the earlier foreclosures are tapped out, so they aren’t snapping up everything that banks price to dump.
A second issue may be that a lot of the foreclosures that are now on the market or coming on the market are in fair rough shape. About one in 3 that I go visit with clients would need significant work before one could even move in. That’s just not appealing to most non-investor buyers and the investors that are left are trying to cherry pick at this point.
So maybe we not only have a glut of regular homes on the market; but, also a glut of foreclosed homes. What a mess! This glut just adds to the problem that I reported in this blog three days ago about too many choices facing buyers. Now they have to see all of the repos and the regular homes before making a decision.
I don’t know how long it will take the market to correct this problem. There is a second big wave of foreclosures just starting to come on the market that was caused by the big ARM resets of late this year. Many of those won’t get to Sheriff’s Sale until later this year or early next and then they have to go through the 6-month redemption period, so it may be May of June before many of them even hit the market. The end is not near.
I suppose that for buyers this is a good problem, giving them many more bargains to look at; but, for sellers this is just more unfair competition in the market and continued downward pricing pressure. As for me, it’s just more cold, dark (and sometimes very nasty) houses to go look at with buyers. I keep my flashlight in the car all the time these days.