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Sunday, June 01, 2008

WSJ: Number of Foreclosed Homes Keeps Rising

by Calculated Risk on 6/01/2008 07:35:00 PM

From the WSJ: Number of Foreclosed Homes Keeps Rising

Lenders and investors in mortgages owned about 660,000 foreclosed homes in April, up from 493,000 in January and 231,000 in January 2007, according to First American CoreLogic ... The April total works out to about one in seven previously occupied homes available for sale nationwide.

... By cutting prices, lenders have managed to increase sales of such homes sharply in recent months in some cities hit hard by foreclosures ... Mark Zandi, chief economist at Moody's, forecasts that the inventory of REO homes won't peak before the end of 2009.
The REO glut is weighing on house prices in many areas, as banks tend to cut prices faster than other sellers.
The lenders were slow to reduce prices at first, apparently hoping for "better market conditions". Now some lenders are getting aggressive as they realize that holding REOs means even greater losses as prices continue to fall.

From anecdotal evidence, it appears the lenders are being aggressive on pricing at the low end, but are still reluctant to discount mid to higher priced homes. This will probably change as the REOs continue to pile up at the banks.