A recent AP story referred to the current real estate market as “bi-polar. ” That assessment would be difficult to dispute. With nearly all-time record-breaking low interest rates and extremely affordable homes and condos, it is difficult to understand how anything could even be left on the market at this point. The problem of course is the uncertainty and instability that equates to poor consumer confidence numbers. The fact that the fed took aim and sued 17 of the nation’s top mortgage lenders is particularly damaging to the economy. The fed’s position is that Fannie Mae and Freddie Mac were sold a bill of goods. As if they did not know what they were buying? With $198 billion in toxic asset sales at issue, this comes at a time when banks are already quite vulnerable.
However, the 500 pound gorilla in the room is the distressed shadow inventory that exists throughout the nation. The term “shadow inventory” refers to the millions of distressed properties out there that have not yet hit the open market. We now have 2.2 million of them in the foreclosure pipeline. 37% of those have not made a payment in more than 24 months; 34% have not made a payment in more than 12 months. All told, that means that nearly three quarters of the mortgagors in various stages of foreclosure have not, on average, made a single payment in nearly a year and a half! At some point, the banks will have to accelerate the process again and turn these billions of dollars in non-performing assets into cash.
For Destin, Seaside, Ft. Walton Beach and Sandestin real estate information, contact Ed and Terri Smith at RE/MAX Coastal Properties, 850-837-5500 x1, or by email smith@realtor.com