Taking the Lid Off

RealtyTrac recently released their foreclosure report, showing a big jump in foreclosures. They increased 6% in July and 2% over last year. The main reason for the spike is government intervention during the housing crash of 2007-2008. The study shows that states that allowed the market to run it’s course and correct on it’s own recovered much faster, some by the end of 2008, than those in which the government intervened.

Here’s the article:

http://finance.yahoo.com/news/surprising-foreclosure-hot-spots-045600829.html

Here’s the pull-quote:

Foreclosures are continuing to boil over in a select group of markets where state legislation and court rulings kept a lid on foreclosure activity during the worst of the housing crisis.

So, the lid was on for several years, in states like Oregon. Now, it’s reached the point where it’s boiling over; in Oregon, new filings rose 137% over last year. As usual, the very people who the government purported to protect are the ones getting burned. Since there will be so many of them hitting the market, the supply of foreclosures will drive prices down. These homeowners will have less chance of short-saling their house. The banks will be forced to sell for less, and they’ll pass those losses on to the consumer in the form of fees.

For the real estate investor, however, this presents the chance to pick up houses in these markets. Don’t miss out on the opportunity to capitalize on these conditions!

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