In some parts of the country, you can practically trip over all of the vacant houses up for sale.
By one estimate (the National Association of Realtors)–there are nearly 4 million homes (defined as everything from a townhouse to a condo to anything pretty much you can live in, except your car!) just waiting to be scooped up.
This, of course, is driving down prices even lower–to the point where, in some markets, sales are picking up.
But there are several danger signs ahead.
For one thing, each of these homes may represent a job lost or a family’s life expectations greatly diminished.
More to the point, many economists are seeing a new wave of foreclosures upon us—not those the result of subprime mortgages, but ones that represent mortgages given to people who had good to even excellent credit, only to see that plummet due to job loss or other economic family/personal hardship.
A revealing set of figures now from a New York Times article: “The median home price nationwide climbed slightly to $170,200 in April from $169,900 in March,” the paper quotes from one report. “Prices, however, were down from $201,300 in April a year ago,” says the paper.
The tricky part is this—while those who still have good credit may be able to take advantage of the lower prices to snap up some real bargains, they run the risk, of course, that , as foreclosures continue to grow, flooding the market with even more homes, their new investment can erode in value.
If they are buying for the long run, they may be able to sit things out (inside their new homes) till prices eventually go back up. But, if they are buying now for investment purposes, they may, in the short run, end up with the short end of the stick.