More Pain in the Housing Market Ahead Thanks to Glut of Bank Owned Properties
According to RealtyTrac.com, the nation's largest banks and mortgage lenders own more than 872,000 properties in the United States thanks to the "groundswell in foreclosures."
According to the New York Times, there are almost twice as many bank owned properties now as compared to 2007, which is when the nation's real estate crisis was really starting to take shape.
Even more distressing - the 872,000 number includes only the properties that are actually owned by banks and mortgage lenders. RealtyTrac estimates that there are one million US homes that are currently in the foreclosure process. The site also figures that banks and mortgage lenders are "poised to take possession of several million more homes in the years ahead."
It is no secret that the massive number of bank owned properties in the United States is driving home values lower throughout the country. In recent months, the double dip in the US housing market became official, thanks in large part to the glut of foreclosed properties. High unemployment and tighter credit markets have both been contributing factors to the weakness as well, but the housing market just can't absorb the hundreds of thousands of foreclosed homes that are currently on the books of major banks and lenders.
According to the New York Times, economists figure that it will take three years for lenders to rid themselves of their backlogs of foreclosed homes. This is the major reason why more weakness in the US housing market is expected in the months and years ahead.
Eventually the US housing market will finally bottom out, but this won't happen until all of these foreclosed homes have been absorbed by buyers. As banks work to clear out their inventory, prices will almost certainly continue to fall throughout the country.
Filed under: Real Estate News