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All the experts are saying that we are seeing signs of a recovering in the housing market and the declining in the number of lender mitigated sales (foreclosures and short sales). However, what they are not talking about is why?

Back in November, Fannie Mae and Freddie Mac had a moratorium on foreclosures through the first part of January in hopes that the TARP bailout funds would relieve homeowners in default and lenders with all those toxic assets. When everyone realized that the TARP funds were never intended to help out homeowners, the incoming president, Barack Obama stated that the first thing on his agenda was his stimulus package and that was going to save America. So Fannie Mae and Freddie Mac re-instituted the foreclosure moratorium to see what affect the stimulus package was going to have on homeowners in default and the lenders with all those toxic assets.

It soon became obvious that the stimulus package was not intended to stimulate the economy or save America. So Fannie Mae and Freddie Mac removed the foreclosure moratorium in March. That was roughly 4-5 months with virtually no new foreclosure filings from the two mortgage giants. That is why we are seeing a decrease in foreclosure sales right now and why the experts are saying that we have reached the bottom.

There are other reasons why we are seeing what looks like a bottom right now as well.

  • Real Estate Values have plummeted in the last 6-9 months or so. This has cause a lot of people who would normally have listed their properties to step back and wait to sell.
     
  • The $8,000 first time home buyers tax credit has drove a lot of new buyers to the market right now, before the credit end on December 1, 2009.
     
  • Real estate investors who still have the ability to purchase properties have been very active buying up good deals on foreclosures.
     

These reasons and more have caused a decrease in available inventory and an increase in number of buyers. Talk to anyone who is active in the market today, and they are facing multiple offers on good deals.

All this activity is the reason the experts are predicting that we have reached the bottom of the market and that we are in the recovery stage. I hope that I am the foul and they are right. Because I think we have only seen the calm of the eye of the storm. I think that later this year, we will see a huge number of foreclosures hitting the market and the first time home buyers will be out of the market when the $8,000 tax credit expires. I also believe that with all the stimulus and spending that the Obama administration is doing will prolong the housing recovery with all the job losses and the massive tax increases, if they get everything that they want passed.

Later this year and the first part of next year will be a great time for investors. I think there will be plenty of inventory to chose from and a lot less competition in the market. I think that we have only seen about 25% of the total number of foreclosures as a result of our current economic situation.



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