Why are there some many foreclosures on the market? Why do the banks set the price for foreclosures higher than comps and standard sales? What is motivating banks to overprice and hold on to forclosed homes instead of selling them?
I think the answer is simple, banks have been controlling the flow of foreclosed inventory onto the market for years now with loan mods and other "debt forgiveness" schemes. Truth is banks will never forgive debt. Now that the market is flooded with foreclosures, they are holding onto the foreclosed assets by setting the prices high for several reasons;
1)The first is that those "assets" comprice a large part of their net worth on the books that are the basis for their stock price.
2) They are getting some kind of tax benefit by holding onto the assets... or the value of shoring up their stock price in #1 above over shadows any tax benefits they receive by off loading the deteriorating assets.
3) They are hoping that buy controlling the supply and demand and by feeding media news that the market is improving, they can create a self fullfilling prophecy and the markets will miraculously recover, which will in turn cause their assets to appreciate in value.
Truth is, there's no real job growth... the only job growth happening is statistical and under employment... this combined with the fact that credit tightening has restricted the number of home buyers in the market place. it takes real job growth to fuel economic recovery and it's just not happening. They have already ****ed all the buyers out of the market by offering the first time buuyers incentives, real estate investors and bank insiders comprise the majority of home purchases... and how many homes are they willing to purchase in an unstable market?
I think we are on the verge of another major slump of a solid 5-15% decline in real estate prices especially in the most over built, over valued and depressed markets. I think the high end homes... the ones that are not good rental property, because of un and under employment are the homes that will be hit the hardest.
When will the banks wake up and cut their losses? Stop making it hard for those that have lost their homes through foreclosure and short sales to get into new homes and start to stimulate the economy? I guess the answer lies somewhere between the next election and the next end of year bonus cycle for bankers. It is criminal what they are doing and what internet and real estate agents, brokers and web sites are doing to support the collusion... which borders on criminal. If the same things were happening in the stock markets, the SEC would be involved and people would be going to prison. The way web sites list property and you see the property go through the phases of standard sale, short sale, foreclosure, being unlisted and relisted, starting with good information on the property and then slowly dropping off information, pictures and any other identifyable information... including the property address... just shows the level of complicity all of those in the real estate business have in what's going on. It's criminal when properties are listed in foreclosure but you can't even buy them in auction because the starting price is so high and then they just sit and rot while banks get whatever benefits they are getting off the property being on their books.
I am absolutely disgusted with the whole system... all the way down to real estate agents who perpetuate the lies by saying every property has multiple strong offers in attempts to get higher prices for declining properties... just later to see the property back on the market with the price still in decline until it goies into the final stages of listing with no pics or information about the property.
Forget occupy wall street, let's occupy just the banks for the clamity of our generation being committed today on real estate. It's pathetic and makes me ashamed to be an american.