I’ve read two articles in the WSJ this week about the housing market, and now I’m less certain than ever about what’s going to happen in the next year.
If 2009 was the year of the foreclosure (and loan modification), then 2010 may be shaping up as the year of the short sale.
I’d say 2011 is more realistic, unless they are predicting a slew of short sales starting in Q1. Our experience with trying to purchase short sales is that they take a long time. How long? We’re not really sure, because we haven’t made it to the end of the process yet. But five months seems to be a reasonable expectation for a minimum, and that’s just for the bank to get back to you with a yes or no.
I’m interested to see what is going to happen when, by the time the bank responds to an offer with a “yes”, the house is no longer worth the amount that was originally offered. Because, some people think we’re still in a housing bubble:
Rental apartment vacancies are reaching record highs. Many segments of the housing market are still oversupplied. And the core demographic in the country—the baby boomers—are reaching the age where they’re more likely to downsize, buying less house in the years to come.
Throw in the tax credits, artificially low mortgage rates, and the fact that the fed is still buying mortgage backed securities, and it’s hard to make the case that the housing market is not still artificially high.
It seems like the easiest way back to a true(r) market would be for banks to sell off their bad assets as quickly and efficiently as possible through the short sale process. Quick and efficient doesn’t seem to be the order of the day, however.