Been talking more than usual with my bank owned property and short sale specialist agent friends lately. This question keeps coming up for them: Why not let the market be a market? Why not call off the government assistance programs for homeowners that aren’t working, ditch any thought of more tax credits for buyers, and release the “shadow inventory” of already-foreclosed property that’s not on the market (there’s ton of it–Freddie Mac, for one, is acknowledging that now to our top agents)?
Will it hurt? Yes. Will prices come down more in some major markets? Yes. Will there be enough buyers? Yes, when the prices are right. Will the shadow cast by the shadow inventory begin to fade? Yes.
A top agent commiserated with me the other day about “pain” in markets. Seems we Americans will do a lot to avoid pain, she said. Couldn’t agree more. Here’s a video she sent me from some popular distressed market bloggers. They’re selling some product too, but get the first part, before the pitch:
No pain, no gain may be the most applicable idea in today’s real estate markets. Have some homeowners suffered pain? Yes. Did they pay too much? Yes. Did they accept unfavorable loan terms? In many cases, yes. Are their family finances in a mess as a result? In many cases, yes. They’ve stopped paying the mortgage and are saving or re-investing substantial savings for their own well-being. Meantime their property rolls toward inevitable short sale or, more likely, a costly foreclosure.
This is all feeling more and more crazy all the time. We are prolonging pending foreclosures. We are delaying evictions. We are withholding property from the market, delaying sales. We have taken buyers from the future and moved them into the present (recent past.) Is it time to stop all this and just let the real market work? Many believe doing so will shorten the timeline to recovery. What do you think?
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