Let’s start with the good news, shall we?
The good news for the Glendale homes market is that buyers want to buy homes in Glendale. Interest rates are at historic lows and, while the inventory of available homes is growing, we have less than six months of inventory on the market. More than six months of inventory would signal a strong buyers market. The market might have hit bottom because the average and median prices for Glendale homes have remained reasonably steady over the last 6 months.
Now for the reality dose. We all know that there is a large pool of homes that are either bank owned or on the way to being bank owned. These properties are not on the market today, but these homes must be sold eventually- we call these homes the shadow inventory. We have a huge shadow inventory in Glendale.
“The problem faced by both lenders and the government is that they can neither afford to kick homeowners out, or bail them out. For lenders, either scenario forces losses to be recognized, while thanks to mark-to-model accounting rules, and little or no pressure to foreclose from the FDIC, they can instead leave non-paying homeowner in place and push those losses into the future. Many believe that most major corporations manage earnings, what could be more perfect than getting to choose when, and if, they recognize mortgage related losses. For the U.S. government either scenario is political death. Politicians have no appetite for allowing banks to put families on the street en masse through foreclosure, nor forcing banks to deal with the problem through bankruptcy cram-downs or other means. At the same time they realize their constituents who do pay their mortgage (or rent) simply won’t stand for a taxpayer funded bailout of their upside down neighbor. Instead, it seems they believe bailouts should be saved for the truly deserving like the executives and corporate shareholders of banks, AIG, GM, etc.”
To read the entire article, click here.
The take away is for the Glendale homeowner who hopes to recover their “losses” in the next 6-18 months. Folks, it simply isn’t going to happen. We are not experiencing a temporary dip in value. Make your decisions based on today’s value.