In today’s economy, foreclosures are a fact of life. There are positive indicators such as the number of foreclosures has dropped down this year from 71,000 in January to 65,000 in February and the number of homes in the foreclosure process has shrunk by 115,000 homes from February 2011 to February 2012.
Due to a recent settlement between government and lenders, housing economists predict that the next wave of foreclosures is about to hit.
This is certain to bring pain to already hard pressed borrowers. This settlement will convert the shadow inventory into homes for sale. Shadow inventory are those homes in the foreclosure process that have not yet hit the market. Home prices have started to rise and homes are currently selling. This next wave of foreclosures will have an effect on the housing market and it presents itself as a double edged sword.
- On one hand, foreclosures flooding the market will tend to slow down the rising prices of homes but experts believe that home prices will still continue to rise.
- On the other hand, flooding the market will tend to push the bulk of foreclosures through the housing market quicker thus bringing us closer to stabilization. Some experts feel that the market could stabilize as early as this year.
I believe that the statistics stated above do not necessarily apply to Active Adult Communities. These communities seem to be less affected as several buyers in these communities are cash buyers. Many communities have as much as 40% of snowbird and snowflake population. Many have sold their homes up north and used the proceeds to pay cash or put a substantial amount of money down. Some just love to get out of the winter (Snowbirds) even though the winter was not so bad this year. Still others like to pop in here and there (Snowflakes). Because of the nature of people buying in these communities, generally, they’ve already reached a point in their lives that a purchase is made with financial stability.
All in all, the foreclosure situation is a reality. Stay tuned for future updates. As I get additional information, I will pass it along through this Blog.
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