Another Foreclosure Wave Coming

For some time, we have been hearing rumors that another wave of foreclosures is coming in the fall time frame. Most of the reports were bits and pieces of information and lots of he said/she said talk. Despite the unsubstantiated reports, I do believe that we will see more foreclosures in fall. With many of the areas in the Twin Cities previously decimated by foreclosures, I expect we will see new areas open up as opportunities for our investors.

Here is a recent email that was sent out by an experienced REO agent that has 200+ REO listings:

The reason for the decline of bank owned listings is not a lack of foreclosures happening it is because all of the major lending institutions (Fannie, Wells, Countrywide, HSBC, etc) had a foreclosure moratorium from December 1- April 1 and some as recently as last week stopped their moratorium.

There will be a second flood of REO properties coming on the market. Everyone in REO is expecting the “flood gates” to open up very shortly. Inventory is low and there are a lot of buyers in the marketplace creating multiple offers and values to increase short term.

As soon as this second wave comes through, inventory will go up again. Supply and demand states that values will once again go down (especially in late fall/winter). Now is the time to sell your non bank owned listings. Tell your clients to get their prices right, because when REO inventory goes back up, it will be like last year again trying to compete with the underpriced REO listings.

Although this is only one person’s opinion, I do know him to be a very knowledgeable REO agent. Even if part of his prediction comes true, hold on to you hats. It will be another interesting fall period for investors.

Have you always wanted to buy investment property, but never knew where to start? Don’t Wait! Get Started now.

7 comments

#1John HoffApril 19, 2009, 4:05 pm

Define “new areas.” Do you mean neighborhoods other than North Minneapolis? Which neighborhoods?

#2Scott FicekApril 20, 2009, 11:06 pm

I think the southern part of North (4th to 40th blocks) has sold everything there is. Happy or sad, as I drive through the neighborhoods, I feel like most of the houses have turned over and the ones that haven’t are in good shape. I think we will see new waves of foreclosures in Brooklyn Center, Brooklyn Park, Crystal, Robbinsdale, SE Minneapolis, Richfield, Bloomington and outward. What do you think?

#3MN MLSApril 20, 2009, 8:08 am

Scott, I agree the flood gates will be opening very soon. 60 mintues did a great piece on the upcoming foreclosures a few months back and I think they got it exactly right. The Alt-A and option arm’s have yet to reset, along with higher unemployment rates buyers will have plenty of inventory to pick from.

#4Dan Simon – Charleston SC Real EstateApril 20, 2009, 8:51 am

It looks like another wave of REO properties is coming. I heard a stat recently that in the US a home is being foreclosed on every 13 seconds!

#5mls mnApril 20, 2009, 9:15 am

Great info Scott….yes, this really shows that retail sellers need to act now if they want to sell. Otherwise they will have to deal with another round of REO’s to compete with….

#6Arnold HaslekApril 26, 2009, 9:02 am

Scott,
I also heard that too from other experts. One reason is a percentage knows that the 2010 foreclosure exception tax burden expires in 2010 and for most the appreciation happened at the end of 2005 and their 5 year ARM are coming due. And the stupid Loan Mod companies are doing temporary fixed again.

#7First Time Home BuyersMay 9, 2009, 5:41 pm

Get your surf boards out…we’re in for another wild ride!!!

I think this will be good for some investors and new buyers in the market, since lately we’ve been up against not enough inventory and facing multiple offers on almost ever deal the past few months.

Bring on some fresh blood!

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