REO Listing Trends – Unemployment and Housing Bubbles

Why the real estate market won’t improve soon

While most real estate agents and brokers are desperately looking for signs that the housing market is picking up, those signs just aren’t there yet. Foreclosures continue to flow with no letup in sight. And there’s another set of statistics showing that the current all-time high for available REO properties isn’t going to drop anytime soon; in fact, more REO registrations could end up being established.

On the Calculated Risk blog, they argue that after a housing bubble bursts, there is a correlation between a house price recovery and unemployment. According to his study of housing bubbles in the late 1970s and 1980s, real house prices continued to fall after these bubbles burst, basically until the unemployment rate peaked. Then the prices stayed pretty stagnant for a few years after that.

Given that most economic experts agree that unemployment is not yet close to peaking, and given that this particular housing bubble was much larger than the other two cited, that suggests that housing prices are not They will start to rise little by little in the coming months. That means more homeowners remain “underwater” (their homes are worth less than they owe on them), as well as more mortgage holders struggling to make their monthly payments. Every housing expert expects many more REO properties to come through the pipeline.

Additionally, the boom in foreclosures in the residential market is now being matched by an increase in foreclosures in the commercial sector. The number of commercial properties, including office buildings and retail stores, facing foreclosure in the coming months is said to be enormous. Las Vegas ranks #1 for commercial property in default, with about $9.7 billion in property in jeopardy.

Michael Campbell, managing partner of Colliers International, said banks have requested that his firm take over management of many different commercial properties, from completely undeveloped land to the 7,000-plus-yard golf course in Las Vegas, Stallion mountains.

Campbell also said she hoped the lenders would rewrite the loans, but that might end up being impossible. “I would say we are heading down, but I don’t see it going up yet,” Campbell said. “With all these loans coming due, there will be more defaults and foreclosures.”

Will anything stop these REO foreclosures? Not likely. Government and industry programs designed to alleviate foreclosures to date have not been very successful. Moratoriums have just postponed the inevitable and many mortgage holders are simply not going to qualify for bailout programs. Refinancing is not going to help with interest rates where they are.

The good news is that REO sellers are getting a lot of activity on their properties from cash rich investors who know a lot when they see it. But with many more REO listings to come, REO agents and brokers will continue to be very busy.

ASREOS.com, the home of ASREOS, the American Society of REO Specialists, is growing by leaps and bounds to help REO professionals gain a competitive edge and gain access to these lucrative listings.