Okay...so I've been called cynical a few times in my life but for the life of me I can't understand why anyone would believe that the economy is now out of the slump. I know...I know...the news is reporting that real estate sales are "up" and that prices are increasing. Sounds good on the surface and part of the reason we're seeing increased consumer confidence. However, the real estate market is supply and demand driven...the fewer properties on the market the more demand there is for what is available and the prices rise as a result of the demand. So...why are there fewer properties on the market in the midst of the worst economic storm our generation has ever seen?
I believe that we're overlooking the obvious. SOMEBODY, SOMEWHERE put a stop to introducing REO properties to the market and nobody seems to know what's going on with them. We know that by the end of 2008 there were already millions of REO properties on the books when the moratorium was put in place to delay the foreclosure process throughout the holiday season. In early 2009 the lenders moved forward with millions of pending foreclosures and (I assume) that most of the people in line for foreclosure were still right where we left them before the moratorium and they ultimately ended up losing their homes to foreclosure. We also know that the the number of foreclosures slowed ever so slightly in 2009 which means that we still averaged approximately 300,000 foreclosures per month throughout the year. Although I don't think that anyone can say for sure just how many properties the banks are holding, I think we could all agree that it is well into the millions. So...why are they holding them and how long with the continue to do so? Is it possible that the banks and government have conspired to hold off introducing any more inventory to the market in order to give the perception that things are improving? Imagine that!
The real question is, how long can we avoid the inevitable? How long will banks hold vacant, unlisted properties before they open the flood gates? If they aren't selling them or renting them what do they plan to do with them? Better yet, what condition will these properties be in when they finally decide to get them off the books?
I love America and I believe that this is STILL the greatest country in the world in spite of our problems but Americans are an amazing people. I guess we choose to ignore the obvious if it's just too painful to digest. Frankly, that is one of the reasons we're in the mess that we're in. We turned a blind eye to the obvious and allowed our economy to tank and we're all guilty as charged. The American people are lead around like sheep and buy into whatever the news tells them. It's been fascinating to watch this process from my cynical seat. The news reports that "we are not in a recession" and Americans believed it EVEN THOUGH all of the signs were there that we were not only "in" a recession but we'd been in one for 2 years before the networks finally reported the bad news. Now we're being told things are improving and we're buying into that too. Wake up America! There is a "boogie man" in the closet and someday soon he's going to get out and we're ALL going to feel the pain. Ignoring the problem does not make it go away.
No doubt I'm a cynic but I am NOT a fatalist. I'm able to deal with whatever comes my way as long as I can wrap my head around the "worst case" scenario. So...what is the worst case scenario with millions and millions of properties hovering out there on the horizon waiting to be introduced to the market? The possibilities are frightening.
May God Bless America. We're going to need it.
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