Are banks ‘hoarding foreclosures’?
WASHINGTON – June 28, 2012 – Recent housing surveys are showing an uptick in home prices, particularly in cities in warm-weather “sand states” that had been hard-hit during the housing slump, such as in Phoenix, Las Vegas, Miami and Tampa. But some housing experts worry that the lift in prices may be temporary due to banks “hoarding foreclosures.”
Some real estate professionals allege that the “synthetically pumped prices” are being caused by “banks stockpiling foreclosed properties and purposely keeping them off the market until area prices truly soar.”
For example, Phoenix home prices have been soaring the past six months.
But in an interview with MSNBC, real estate professional Michelle Tremblay with West USA Realty in Phoenix, said, “We can see on the street what’s vacant and what’s not. We’re watching these (foreclosed and non-listed) houses just sit and rot. The banks are letting these houses just deteriorate. They’re holding them and releasing them slowly to drive the value up.”
Some markets are seeing a decrease in inventory of for-sale homes, which has lifted home prices due to an increase in demand. But real estate professionals say they’re concerned that the supply-demand pressure raising selling prices is only temporary and will turn around when banks start releasing their foreclosures into the market. Some have accused banks of purposely holding onto foreclosures to wait for home prices to recover so that they can get higher returns for the homes, but real estate experts worry that the tactic could stall the housing recovery.
However, Mark Vitner, Wells Fargo senior economist, says that large banks are not hoarding foreclosures and waiting for prices to perk up.
“I don’t think there’s any concerted effort to hold properties back from the market,” Vitner said. “The process to (work through and re-sell) foreclosure inventory is lengthy and there just seems to be a lot of hurdles out there to getting these properties to market. A lot of the best properties have been in foreclosure and have already sold.”
Backing up that assertion, CoreLogic, a market analytics service, reports that residential shadow inventory – which includes foreclosures – fell to 1.5 million units in April, a 14.8 percent drop from the same month one year earlier.
Source: “Home Prices Higher for Third Straight Month as ‘Sand States’ Drift Away From Crisis,” MSNBC.com (June 26, 2012)