Analysts are predicting that REO, Real Estate Owned, bank owned properties will not peak until sometime in 2013. Nearly half of the more than 552,000 REO properties liquidated in the first half of 2011 were held by private banks. In the coming years, the government will be the primary holder liquidating their inventory. This includes properties owned by HUD, Freddie Mac and Fannie Mae.
Estimates now are that the inventory could reach 1.48 million properties in 2013. Bank of America Merrill Lynch analysts estimate a 10% increase in the projected amount in 2012. Though these analysts don’t expect as much downward pressure on prices as we’ve experienced in the last few years, there will be further softening of prices into 2013.
The government is ramping up to dispose of inventory in foreclosure, and one estimate is that this will amount to around 595,000 properties in 2013 alone. Total REO liquidations aren’t expected to drop below 1 million until 2015, according to Bank of America Merrill Lynch.
Last month the Obama administration began developing strategies to sell this mass of properties. The Federal Housing Finance Agency is working on ways to refinance more underwater borrowers to keep them from walking away from their homes. One economist suggests renting the homes back to their owners to keep many of them occupied and stabilize the market.
Other analysts doubt that the government will allow this mass of properties to hit the market for sale in a short period of time, as it could crash a market that’s already struggling mightily. Susan Woodward, an economist with Sand Hill Econometrics suggests that a massive program to refinance borrowers whether underwater or not is the best approach. This would save American households $250 billion annually. She considers it as an acceptable one-time fix to get the real estate market back on track and bring private lenders back into markets.
Analysts are predicting that REO, Real Estate Owned, bank owned properties will not peak until sometime in 2013. Nearly half of the more than 552,000 REO properties liquidated in the first half of 2011 were held by private banks. In the coming years, the government will be the primary holder liquidating their inventory. This includes properties owned by HUD, Freddie Mac and Fannie Mae.
Estimates now are that the inventory could reach 1.48 million properties in 2013. Bank of America Merrill Lynch analysts estimate a 10% increase in the projected amount in 2012. Though these analysts don’t expect as much downward pressure on prices as we’ve experienced in the last few years, there will be further softening of prices into 2013.
The government is ramping up to dispose of inventory in foreclosure, and one estimate is that this will amount to around 595,000 properties in 2013 alone. Total REO liquidations aren’t expected to drop below 1 million until 2015, according to Bank of America Merrill Lynch.
Last month the Obama administration began developing strategies to sell this mass of properties. The Federal Housing Finance Agency is working on ways to refinance more underwater borrowers to keep them from walking away from their homes. One economist suggests renting the homes back to their owners to keep many of them occupied and stabilize the market.
Other analysts doubt that the government will allow this mass of properties to hit the market for sale in a short period of time, as it could crash a market that’s already struggling mightily. Susan Woodward, an economist with Sand Hill Econometrics suggests that a massive program to refinance borrowers whether underwater or not is the best approach. This would save American households $250 billion annually. She considers it as an acceptable one-time fix to get the real estate market back on track and bring private lenders back into markets.