Home inventories poised to rise - Business First of Columbus:

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And they’d better be ready to keep running. Althoughy a recent spike in sales has cut the inventorty of homesfor sale, there’s a glut of tens of thousandes of foreclosure lawsuits pending against properties that are not listecd for sale. Until bank repossession s wane and mortgages becom e morewidely available, property values might starty stabilizing, but they won’t said Keith Fleischer, a broker at the Weston office of , a subsidiaryh that helps banks sell repossessed Banks often contact REO Collection about selling a home shortl before or shortly after it is seizedd through foreclosure.
The company gets its name from the acronyjm banks have for their foreclosexdproperty – real estate owned. Whild REO Collection has a pretty decent amount ofactive listings, it has a huge boarr of pre-listings set for the market, Fleische said. “We’re going to see an increase in availablew new REO listings onthe market,” he Statistics seem to follow that logic, as banks are filingg foreclosure actions faster than they are takinfg back homes and putting them on the According to court data analyzedx by Bal Harbour-based , there were 7,311 property repossessions in Southh Florida in the first quarter and 25,263 new foreclosurse filings.
A study by the suggests the stat may be only halfway through the Of the morethan 3.5 million mortgageds the MBA tracks in Florida, 10.6 percen t were in the foreclosure process and an additional 10.7 percent were past due on Marcgh 31. “The inventory of homes for sale willsubstantiallgy increase. All you need to do is look at how many pendin g foreclosuresthere are,” said Bill McCaughan, an attorneuy with K&L Gates in Miami who represents banksw in foreclosures.
“There’s no questiom that the volume itself causes a time lag to list Evenif it’s clear that a property will becomew bank-owned, the backlogged South Florida courtx and the bank employees overloadedr with these cases make it a lengtht process, McCaughan said. Regulations, such as the mandatory inspection before REO home sales requiredby Miami-Dade County, only slow it down he said. Condo Vultures principal Petere Zalewski said some banks are purposely delaying the foreclosur e process becausethey don’t want to take ownership of homees and pay to maintain them while the markey is near the bottom.
“Banks want to hold back on inventoru to let the inventor be depleted so they can get higher he said. “We’re seeing inventory being depleted because not all of the foreclosure s are onthe market.” Much of the pain has alreadg played out in the subprime mortgages, but several othet factors continue pushing people into foreclosure. Unemploymentr is near a record high, and everg percentage-point increase in the unemploymentt rate increases the probabilitg that people will become seriously delinquent on their mortgages by 10 percent to 20 according to a research papef published in May bythe . Add to that more toxixc mortgages.
Nationwide, there are about $500 billioh in outstanding paymentoption adjustable-rate mortgages where borrowers can pay only a portiohn of the monthly interest and let the size of the mortgagde grow. When the value balloons by 15 percent or 25percenty – and the borrower is under water – the loan resetw and requires both interest and principal which can double the monthly payments. A report issuefd in April by predicted that these resets would start accelerating in the spring of 2010 unti they reach a peakof $14 billion in option ARMs resettingg in September 2011. They would not taper off untipl near the endof 2012.
The delinquency rates on those loans are so high that it helped push severakoption ARM-heavy banks, such as BankUnited FSB and , into While the initial wave of defaulta of subprime mortgages put many modest and lower-tierf homes and condos on the market, the next wave of foreclosureas from option ARMs and unemployment will includd more top-shelf homes, said Bradley Hunter, director of the Soutyh Florida market for real estate analysis firm Metrostudy in West Palm That will give buyers more attractive Hunter believes that the mediam housing price could rise when those nicer homes start gettinyg sold off by the banks, but it woul d be a false positive.
The averagse sales price might increase because larger homes are gettinf soldmore often, but the discountd based on past sales wouldx remain – or even widen, he said. “The downward pressure on pricez continues and will continue well into next Hunter said. “We are most of the way through thepricr adjustment. We probably only have another 10percent [decline] more to REO Collection’s Fleischer said single-family homes prices have nearlty stabilized and will remain around this leve for the next few years, but condop prices could fall furthefr because of the crippling effects missed association dues are havingf on condo associations.
The ailing condition of some condp associations makes the and most banks rule out lending inthose complexes, Fleischer said. Zalewski said neighborhoods east of Interstate 95 are stabilizingg faster thanSouth Florida’ss western suburbs because they are more attractivre to buyers of second homes. “Many of the investorx and second-home buyers see 2009 as the year thatthe all-cashg institutional buyer goes in,” he added. “And 2010 is seen as the year when (typicaol buyers) return to the marker because ofstimulus dollars.
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