(English) The New Foreclosure Mess: A Possible Silver Lining
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Steve:
Great post, but I have a question: Why is less choice and higher prices a “good thing”? Who likes to pay more for anything – computer, airline ticket, medical expenses – and have fewer choices to select from? I’m talking, of course, from the buyers’ perspective, especially those who are having property sales pulled out from under them by the “recall” of foreclosures or pushed farther off by the possibility now that prices will rise…..
Investors have already indicated they aren’t interested in playing at higher prices, and were just getting back into the market as they were reaching the lower prices of these foreclosed properties. Normal single-property purchasing consumers are under serious inflationary pressures, unemployment concerns and eroding savings: higher prices don’t help them, either. The only people higher prices help are sellers, but since it’s a buyer’s market, I can’t see how even sellers are really better off if their home prices are allowed to rise.
Then again, I’m always the contrarian!
Matthew
@ Matthew,
In the short term (could be weeks, will probably be months), sellers of non-distressed properties will avoid having to compete with as many discounted properties (foreclosures) as they would have. From a simple ‘supply & demand’ calculation, that means prices will not be as negatively impacted as previously thought. For whom is that a “good thing”? Any homeowner trying to sell.
Steve
I agree that we could begin to see pricing stabilize for now. However, what concerns me is that when the foreclosures are placed back on the market it could, as you say affect the supply & demand aspect of the market and drive prices down. This will send the media into a tizzy and begin the talk about the real estate market in a “double dip”. Causing more uncertainty in the market.
My opinion is that it will have a negative impact on the current as well as future market. Many people make their purchase decisions not only on today’s prices but on anticipated prices. Those who have to buy now…will buy. But those who feel they can afford to wait and expect prices to drop…will sit on the sidelines waiting to see what happens. And now with the FED talk of lower interest rates TO COME. Why not wait could become the mantra!