The Foreclosure Crisis Revisited
by Henry S. Harrison
It has been over 5 years since the housing bubble burst dragging down the whole economy with it. Those of you who are long time readers of Real Estate Valuation Magazine (we have been continuously published for over 20 years) will remember that we saw the bubble burst coming and predicted it would take 10 years for a full recovery. Sadly, it looks like that prediction is coming true. Since that time the Government has taken over Fannie Mae and Freddie Mac and the housing crisis is far from over.
Five years later here is where we are and nationally (the are local exceptions): housing prices are no where near where they were five years ago. The good news is that appraisers were again busy, and the volume of resales is recovering so that many of the Realtors and appraisers are doing O.K. The bad news is that this does not do much to help the overall the economy. What helps the general economy is the construction of new houses. Also it has been reported in many areas the volume.
In spite of the large inventory of foreclosed houses for sale the annual rate of new housing units has risen to about 600,000 units which is about half of the rate of new house construction prior to the bubble bursting. Many of these reported new construction units include units in multifamily buildings.
Many of these new units reflect a growing trend to move into the cities. Toll Brothers has been a large developer of suburban mega-homes. According to an article in Fortune magazine they are now putting up luxury condo in places like Manhattan and the hippest neighborhoods in Brooklyn.
In March 2013, Realty Trac — an online marketplace for foreclosed property — published a foreclosure inventory analysis showing nearly 1.5 million U.S. properties still actively in the foreclosure process or bank-owned (REO). This is up from the same period a year ago. These figures peaked in 2010 at over two million.
Many foreclosures are “Zombie Foreclosures” – houses that are vacant because the homeowner moved. Florida leads the pack with 90,566 zombie foreclosures, Illinois with 31,668 zombies, California 28,821 houses.