More foreclosure homes are scheduled to be sold at auction come 2012, with California leading the charge as the state records an over 60% increase in the number of foreclosure homes for sale set to be auctioned off based on November data and compared with the previous month. Majority of these properties are expected to be offered at discounted rates.
This may seem good news for homebuyers and investors, particularly those that have been buying properties with the plan of entering the growing rental market. However, some analysts and even members of the general public are afraid that this means more trouble for the housing industry.
What it will mean for the sector
It is not surprising that a lot of people are worried about this expected rise in foreclosed homes. After all, lending is still tight and the job market is still weak and a surge in foreclosure numbers will mean more pressure on property prices. However, surprising as it may seem, this may actually be a positive development overall.
Most of us are aware that there are more home foreclosures that have yet to be introduced into the market and are actually part of the so-called shadow inventory. The expected rise next year should not be surprising as these properties are part of these shadow inventories and they will, of course, enter the market eventually.
Who will benefit
These previously-unaccounted-for foreclosures will be better dealt with if we knew of their existence. They will be offered at heavily discounted prices, which will be good for investors and homebuyers. However, this does not mean that they are the only ones who will benefit.
The more active property buyers are, the faster the whole market will get on its feet. This may sound too simplistic, but home buying is one part of the housing industry that has always pushed the sector forward. Now, what we need to focus on is to make it a bit easier for these buyers to purchase these foreclosure homes and giving them a chance to get affordable mortgage rates is one way of helping them out.
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