It's still tough out there for a lot of folks. Even though foreclosures are expected to peak this year nationally, they are still looking to come in at numbers of 1 million a year through 2013. A full third of all "homeowners" now owe more than their homes are worth. Under normal conditions, the number of people with negative equity has averaged closer to 5 percent. A total of 831,574 foreclosures or bank-owned properties sold in 2010. They sold at an average discount of more than 28% compared with properties not in foreclosure. That action has helped force down home prices to their lowest level in nearly 9 years.
More and more people are forced to make a choice of walking out (strategically defaulting) on their underwater mortgages and suffering the negative impacts to their credit ratings, or continuing to throw money at a depreciating investment. In Florida alone, there were 485,286 properties subject to a foreclosure filing during 2010. That means there is a lot of housing supply (shadow inventory) sitting with the banks waiting to be placed on the market.
While the picture is certainly dire for some, the Vulture Investors are very busy. Nearly 40 percent of all sales last month were either foreclosures or short sales. The Flippers are also making hay while the sun shines. Of the 831 thousand+ distressed sales of last year, a significant percentage (7.9%) of those foreclosed homes sold again within 180 days.
As the fictional character (Gordon Gecko) from the movie "Wall Street" exclaimed, "It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another."
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