Property Q&A in Sacramento>Question Details

Joan, Home Buyer in Sacramento, CA

what happens when they lift the moratorium?

Asked by Joan, Sacramento, CA Wed Apr 8, 2009

does it happen immediately?

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3
Great question. I have noticed the new listing inventory of foreclosed has been shrinking, while the short sale inventory has continued to grow. New pending sales numbers match new listing numbers for the region for the first time in years.

With supply and demand moving towards a ( temporary ?) equiibrium, one would expect an end to the decline of housing prices. What happens when the values are reported as stable or rising?

Normally, I would predict that more people would jump into the market to create more demand. This will probably not be vigorous until we see an improvement in the employment picture as well as the decrease in available homes for sale.

New accounting rules allow banks to avoid writing down their bad loans, until after foreclosure is complete. This gives them a really strong incentive to not foreclose, but to leave homeowners or tenants in the defaulted homes. In other words, the "official" moratoria are being replaced by unofficial moratoria.
The banks (and everyone who wants the economy to recover) are hoping that we can just all wait out the recession for monhts, perhaps years, and enough borrowers will recover enough financially over the long run that the level of new foreclosures will drop down to a historically average level.

In summary, my opinion is that there will be no deluge of new listings in any one month.
0 votes Thank Flag Link Thu Apr 9, 2009
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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Some of the banks are saying to heck with low prices and renting out their inventory. They simply transfer the title into a holding company and put a tenant in place.

I heard this first-hand from an owner of a prominent rental company in Sacramento.
0 votes Thank Flag Link Wed Apr 8, 2009
There is no official 'moratorium' where the floodgates open with new home listings from the banks. Banks have been releasing a limited amount already, but there is a slower pace than there was mid-2008.

Banks will release the homes to the REO listing agents with doing the prep work on the properties first. That includes visiting the property to determine occupancy, completing a trash out of the property, moving the utilities to the listing agent's name. Some of that has already occurred but not all of it. Many have been maintained by 'property management companies'. The banks will then determine values one last time, asset managers will then inform the listing agent when to list it, at what price, and any other circumstances related to the listing. At least that's what my office's experience has been.

It just won't be overnight, and not all at once. But rumor has it, they will be releasing most of the inventory between now and June. What really happens is anyone's guess. But I guess we'll all know soon enough.

The key is to be informed of the values for the area that you're looking now. In that way, you can spot the bargains when you see them and be prepared to react.
Web Reference: http://www.suearcher.com
0 votes Thank Flag Link Wed Apr 8, 2009
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