The inventory of distressed properties in the system is going to get higher within the next few months, according to an article I read an article in the paper this past week. Home foreclosure filings slowed in October for a third straight month, but because of the rising unemployment, the next year will see another record year for failing mortgages.
According to RealtyTrac, foreclosure filings, including notices of default and bank repossessions dropped 3% in October from the previous month, but were up 19% from the previous year. Although foreclosure filings are off of the record high hit in July of 2009, with federal efforts intensifying to press lenders to alter terms for struggling borrowers, the chief problem lies with unemployment, which is at a 26 year high.
It is projected that there will be as many as 3.4 million homes that will get a foreclosure notice this year, which is almost double the number from last year. If the unemployment situation doesn't improve, the numbers for 2011 will be similar. Couple this with the next wave of resets to adjustable rate mortgages, and our industry is in for a wild ride.
As buyers are already wary of making a purchase commitment because of the situation in the jobs market, with the volume of distressed properties increasing, it may cause a stall in the system that no amount of stimulus money will be able to move. The next few months will be a barometer to the 2010 market, especially when the retailers disclose their numbers from the holiday buying season.