Short Sales Soar in California
Once again, with poor economic forecast and what I consider to be the twin pillars of real estate distress (unemployment and negative equity) continuing to remain problematic in most of the country; and the Federal Government’s HAFA program being encouraged for those who cannot qualify for loan modifications or were victims of dual track foreclosures, we should hardly be surprised that Short Sales are increasing in popularity in California and the rest of the country. It simply makes financial sense for a lot of homeowners, lenders and investors at the moment.
What we have learned from the article below is that short sale transactions have tripled since 2008 and California accounts for about 25% of all short sales in the nation. Until we eliminate these distressed properties from competing in the marketplace with normal, non-distressed properties, we cannot expect the housing sector to come out of its current funk.
We all wait with hopeful anticipation of positive long term housing news which seem to elude us in favor of uncertain or often times confusing short terms trends. Depending on the day of the week, we can get information that we are heading in the right direction or in the wrong direction. No one can predict with any amount of certainty whether we are out of the housing slump or not.
As I have said over and over, like a broken record, until and unless we can address the unemployment issue, the housing sector will not come out its current mess. Those people who are out of a job are more willing to give up their homes and those who have jobs are afraid of being laid off and will not consider buying a new home or moving up to larger homes. So we have a situation where the unemployed are unloading properties, but the employed who can afford to buy are too afraid to buy. It’s a sticky mess we are in. Unfortunately, add to that the issue of what many call the shadow inventory, and we are looking at many years out into the future where distressed properties will continue to affect the real estate space in a negative manner.
Yes, Short Sales will continue to soar in California, but that is not necessarily good news.
http://www.latimes.com/business/la-fi-short-sales-20100811,0,7193924.story
