2010 will bring more mortgage resets, more foreclosures, and larger unsold housing inventory.

I know an attorney who works in housing foreclosures representing B of A (in CA). B of A has 100,000 new foreclosures to divide up among 3 law firms. This is just one area of the country, and it will get worse all over.

In 2010 the government will push banks to do more short sales and fewer foreclosures. But short sales require buyers, who now must actually “qualify” for a loan. Banks will dump more houses onto the housing market. There are not enough qualified buyers. If you introduce higher mortgage rates, there will be even fewer qualified buyers.

The improvement in housing now seen and the bump in rates is (in my opinion) only temporary. The next down leg in housing is just around the corner. I expect it to get worse by April-May, and even worse by July-August.

I believe the Fed will have to continue housing support for all of 2010 and have to do whatever necessary to keep mortgage rates down for all of 2010.

If China does not buy the treasuries, then the Fed will buy them.

- Chancer

As an owner of more than a few investment properties, I would like nothing more than for the real estate market to suddenly come back to life. However, it has been my experience that the banks are holding a lot of foreclosed units off the market. I see more and more houses setting vacant for longer and longer. I know the bank doesn’t own them all (unfortunately, I own some, too) but they do own their share and I believe that share to be increasing rather than dwindling. Also, the pie is getting much bigger.

I suspect that most of the increase in the pie belongs to the banks. I haven’t bought as many additional properties in the last year as usual (we’re down to less than 20 new properties from an average of over 50 per year previously) even though prices have been favorable. I know many others in the industry who have made similar adjustments. There just aren’t any really big players out there to account for all the newly vacant properties other than the banks. BTW, most investors don’t just let them sit vacant like the banks do.

So, there you have my reasoning. It is region-bound, so it may not apply nationally. But it is observational, feet on the ground information that I thought could be useful.

Having said that, I think things in the real estate market are worse than reported (by far) and will continue in a depressed state at least into 2012. And I will be depressed, as well, as the butter has been scraped from my bread..

- Mark Bern

Related Posts:

• Hard to disagree with any of these points about the coming double dip recession.
• Mortgage Insurers Won’t Pay on Bad Loans
• More good news for the market to ignore….
• To all the pessimist out there, This is from someone who “been there and done that”.
• What a surprise markets can go down actually. Unbeliveable!

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