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Real estate agents and everyone else connected with the housing industry are shaking in their boots.

Will a shadow inventory of low cost homes flood the market?

• Many foreclosures have not hit the market but are in lender’s inventories throughout the county.
• Many modified loans won’t make it past the trial period and will foreclose, while others will default again – as has been the case of 51% of loans modified in early 2009.
• More homes will foreclose when their adjustable rate mortgages reset this year, sometimes doubling house payments.
• Homeowners with negative equity may fall into foreclosure or may chose to strategically default.
• Many investors who bought foreclosure bargains to flip them may put them on the market rather than renting them out.

If these hit the market all at once, the results could be disastrous.  Housing values that have crept up in DC and throughout the country could be quickly undercut.  However, not all is lost.

There are potential reasons why this may not happen if all parties involved in foreclosures act just a little differently.

• Banks could offer meaningful modifications that would keep people out of foreclosure.  Some homeowners in over heads might still lose their homes, but the numbers would be way down.  The latest modification in Making Homes Affordable announced on March 26 might facilitate principal reductions for some.
• If new programs designed to bring underwater-homeowners back to shore are effective, people may have fewer reasons to walk away from their homes by choice or by circumstances.
• Investors might see the wisdom of renting out their properties, especially if they paid cash, in an economy where loans are harder to obtain.
• In the best of circumstances any or all of these factors will lessen the amount of shadow inventory on the market, which will allow continued improvement of the housing market.

Regardless of what’s lurking in the shadows of the housing market, Express Realty Services can help you find an affordable home in DC, Maryland, or Virginia.  Contact us today!

‘Every action has an equal and opposite reaction’ is no longer a theory that relates to the world of Physics alone. Housing economists seem to be singing the same tune these days! Throw a brick up in the air (the action), and it will fall and hit your head (the reaction) – especially if you don’t move in time.  It’s the reactions that can potentially kill you. In the current foreclosure crisis, there are inevitable, though unplanned, reactions that affect people everywhere.

Job loss has attacked the most creditworthy of homeowners, so many who bought smart are unable to pay now.  This affects their credit score, but so do loan modifications.  Those who get lower payments take a hit on their credit scores.  Either circumstance can affect them – particularly if they are job hunting and requested to share their credit scores with prospective employers.

 Some people complain they cannot get help to deal with the crisis because they don’t qualify or because current programs like HAMP doesn’t address their situation.  Meanwhile, others complain that the wrong people have been helped or that some do not deserve help.  Of course, whole new classes of armchair legal and constitutional scholars have arisen to debate the effects of loan modification on contract law and the free enterprise system.

 Any of these points could be an article by itself, but the foreclosure crisis reaches everyone, whether personally involved or not.  Municipalities, which depend on taxes to pay for city services, are unable to deliver when their tax base is cut.  The result – foreclosure, unemployment, and even loan modification – limit city resources.

 When garbage pickup, police response times, and pothole repair have all had time lags, they definitely represent the far reaching reactions that serve as a negative consequence to foreclosures.

Express Realty Services can help you find a nice affordable home in DC, Maryland, or Virginia.  Call us today and ask about our full catalog of remodeled and renovated homes.