Analysts Bemoan Languishing Market Even as Foreclosure Volumes Fall
Although the number of properties entering foreclosure in the first quarter of this year dropped 27 percent over last year, real estate analysts like James Saccacio, RealtyTrac’s CEO, are concerned that the real estate market “continued to languish” in early 2011[1]. He credits “weak demand, declining home prices…and the dual threat of a looming shadow inventory…and the probability that foreclosure activity will begin to increase again” with keeping the real estate market slow in early 2011. Because many lenders are not certain what the fallout from last fall’s robo-signer debacle will be, they have slowed or even stalled many foreclosures while they await the outcome of negotiations on a settlement agreement[2]. However, with even the agreement somewhat ambiguous – attorneys general believe that the penalties enacted by federal entities are not severe enough and have called any agreement reached nothing other than a “ground floor” for their own investigation – much of the process seems largely stalled.
Is it possible that this slow-down is a good thing? While it is not helping prices, it could help ameliorate the inventory issue. Do you think that banks should hurry foreclosures or continue to delay and see what happens?
