5 reasons why REO continues strong through 2010.

By
Real Estate Broker/Owner with Liberty House Realty LLC

1. Unemployment: Until people have the income to afford their mortgages, we will not see a recovery in the housing market. I believe a direct correlation exist between unemployment and mortgage defaults, the higher unemployment gets the more defaults we will see. This ultimately leads to more inventory and of course, lower home prices.
2. Tightening Credit Standards: The harder it gets for people to obtain the necessary credit to purchase a home the slower it will take to reduce the inventory we have. Make no mistake, I don't believe in loosening credit standards for the sake of it but, it's a fact that if people can't get credit, inventory won't reduce quickly and therefore slowing if not halting a housing recovery.
3. Artificial Government Inventory Control: In other words, arbitrary influence by the Government to keep unworthy homeowners in their homes at all cost. Make no mistake, this is housing inventory control in the most negative way. I have GSE Investor loan reinstatements after foreclosure on my desk right now where Fannie / Freddie is offering to reinstate a homeowners loan where they will consider unemployment benefits as income........seriously!
4. Energy Prices: Did you realize that you are paying .86 cents more for gas this week than you were this same week last year? Most likely you haven't noticed because we have all been pre-occupied with the nations job losses, underwear bombers, Massachusetts election, and Washington bleeding red ink. You may not have actively noticed it but, if energy prices continue to rise people will have less discretionary spending and that pulls buyers out of the market and couple this with Great Depression level unemployment and we end up with more housing inventory.
5. Risk of Hyperinflation: As the US currency continues to looses value against it's competitors we find ourselves having no other choice but to increase inflation. If the Government continues to spend / make money with less and less value people refuse to hold onto the Dollar and start to move their assets into other currencies or metals and therefore an uncontrollable rise of inflation begins.

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5 reasons why reo continues strong through 2010

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Rainer
23,567
Marcus Barber
Exit IH-10 Realty www.RealtyPromo.com - San Antonio, TX

Your information is correct.  Most 'experts' are predicting a strong tide of foreclosures until 2011/2012 at the minimum especially with the "Shadow" inventory being released.

Jan 26, 2010 03:12 AM #1
Rainmaker
159,559
Ray Wright
Keller Williams Realty - Riverside, CA
SoCal Realtor - A.L.C.

All I can say is, "yep!"

Jan 26, 2010 02:41 PM #2
Rainer
154,706
Paul A. Perry
Certified Inspections, PC - Residential & Commercial Property Inspections - Crossville, TN
Home Inspector - Crossville & Cookeville, TN

The reality of your post puts me in mind of an old saying:

Hope for the Best but Plan for the worst.

Jan 26, 2010 02:56 PM #3
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Rainer
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Liberty House Realty LLC

Turning the American Dream into Reality
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