I am suspecting that the banks held up and are holding up inventory in a strategic move some seen coming from 2-3 years ago. Think about this statement for just a moment. It makes sense to freeze the product thus controlling supply and demand and creating the value after that. Only someone who has that much gold can make the rules such as this one. He who has the gold rules....
NEW LAWS WERE PASSED
Two to Three years ago, it was a frenzy with short sales, defaults, foreclosures abounding and banks breaking the law while handling them all. In the midst of all this are questionable bank practices, borrowing procedures and changes in laws applicable to the lending industry including appraisers, mortgage agents as well as processing and underwriting.
DURING THE PEAK OF FORECLOSURES
At the time, you could go into a bank and buy their product in bulk called foreclosure portfolios if you took the mix of good with the bad and paid all cash. Some banks just wanted to liquidate and move on but that was not enough. A Trillion dollars worth of equity was being lost from false and improper inflation of prices and manipulating of the supply and demand rules and dynamics
CONTROLLED SUPPLY AND DEMAND?
Now, I see the potential for the same thing only more refined and calculated. We settled the criminal charges with the banks, made regulatory changes, elected a new president and what is left is to now have business come back by releasing investment funds to help this new Real Estate cycle take hold and even rise. The release will boost employment and get manufacturing going again
WHAT WENT UP CAME DOWN AND NOW IS TRYING TO GO UP... AGAIN
I suspect the banks have slowed down the liquidation of their foreclosed properties and in the doing of that have created firmer pricing, lack of inventory and appreciation dynamics too. Consider that there are still many billions of dollars yet to be cured in fallen properties that when any appreciation kicks in, that is a significant jump to anyone who has this inventory
RECAPTURE OR OFFSET?
Can the banks recapture losses with this move? NO...not recapture but offset and reduce the losses YES. Also, have you noticed an effort to try to win people back by re-visiting and considering loan mods, principal reductions, larger amounts of cash for keys and long term negotiations with defaulters without the threat of eviction. Of course there are laws in place now that support this
WHAT IS CAUSING THE SHORTAGE OF INVENTORY?
Are the banks responsible for the shortage of inventory, the rise in demand for product and the multiple bidding we see going on or is it to be attributed toward low interest rates and product priced to sell? How about some or all of the above? The results are starting to reveal something obvious. The third leg of our economy is growing stronger...REAL ESTATE
IT MAKES SENSE BECAUSE REAL ESTATE ALWAYS PAID OFF
For whatever reason one thing is for sure. The circumstances are HERDING millions of people to purchase and re-purchase Real Estate right now. The result will be a healthy demand for product not a spurt or a spike but the old reliable small percentages per year called appreciation will return. What this has proven in the past is that when people have money in their home called EQUITY, they feel good and when they feel good
THEY SPEND MONEY...The economy may very well be readying itself for stability and growth. Own something and keep it if that is true
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