If you have been reading my column or my daily blog, ‘Keep it Real in Sacramento,’ you know I have been writing about short sales and how some lenders are incenting homeowners to pursue them rather than let their homes go to foreclosure. Maybe the reason they are becoming focused on short sales is the nation’s largest banks and mortgage holders currently own more than 872,000 homes. This is a number recently published by RealtyTrac and the number is nearly twice the amount they repossessed in 2007, when the financial crisis began.
According to RealyTrac it is going to get even worse as they reported the lenders are projecting to foreclose and take ownership of an additional million homes across the country. There is little doubt this has economists and others concerned about the housing market and any potential recovery. High levels of inventory of available homes will continue to depress home values and it could take up to three years to work through the projected level of REO properties.
Lenders can see the writing on the wall and understand to sell foreclosed homes during a period of high inventory means deep discounts. Although they have reduced their costs of foreclosure and sale of REO properties the short sale is becoming a much more attractive alternative.
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