Recent wire reports indicate that Banks have finally caught up with the mess they created around foreclosure activity a year ago. Because of paperwork mistakes and carelessness, many homes that could and should have been foreclosed on in 2011 held out into this year. The banks have begun preparing to place a new wave of these foreclosed houses on the market, probably by early next year. In June, the number of houses entering the foreclosure process increased on an annual basis for the second month in a row.
A glut of foreclosed houses added to the market will likely exert downward pressure again on home prices, making the purchasing of a house even more cost effective, but importantly, bought to live in long term, not as an investment. There is no indication of a rapid rise in home prices that would make adding a foreclosed home an investment diamond.
Now, for those of you who are considering selling your home in the next year or so, you should think about a couple of things. First, if you have enough equity to get through the sales process, there should be some very good value homes on the market entering next year. Secondly, if you wait until the early part of next year to sell, you may be faced with a lower market price than if you sell before the foreclosed homes hit. Third, if you have the patience to wait, begin adding $50 per month to your house payment to increase the equity in your home. Accelerate the pay-down of any second mortgages, with a plan to get them off your books within 18 to 24 months if possible. Then, when it becomes clear that the real estate market is cycling back up, you will be in a much better position to sell with equity available for your next purchase.
At least that is my opinion. What do you think?
If you would like a free competitive market analysis, to get an idea of what your home is worth right now, let me know and I will arrange for you to have this done.
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