Are Banks ‘Hoarding Foreclosures’?
Recent housing surveys are showing an uptick in home prices, particularly in cities in warm-weather “sand states” that had been hard-hit during the housing slump, such as in Phoenix, Las Vegas, Miami, and Tampa. But some housing experts worry that the lift in prices may be temporary due to banks “hoarding foreclosures.”
Some real estate professionals allege that the “synthetically pumped prices” are being caused by “banks stockpiling foreclosed properties and purposely keeping them off the market until area prices truly soar.”
For example, in Phoenix, in the “sand state” of Arizona, home prices have been soaring the past six months.
But real estate professional Michelle Tremblay, with West USA Realty in Phoenix, tells MSNBC: “We can see on the street what’s vacant and what’s not. We’re watching these [foreclosed and non-listed] houses just sit and rot. The banks are letting these houses just deteriorate. They’re holding them and releasing them slowly to drive the value up.”
Some markets are seeing a decrease in inventory of for-sale homes, which has helped lift home prices in some areas due to an increase in demand but limited supply. But real estate professionals say they’re concerned what will be temporary when banks start releasing more foreclosures to the market. Some have accused banks of purposely holding onto foreclosures to wait for home prices to recover so that they can get higher returns for the homes, but real estate experts are concerned that could stall the housing recovery.
However, Mark Vitner, Wells Fargo senior economist, asserts that large banks are not hoarding foreclosures and waiting for prices to perk up.
“I don’t think there’s any concerted effort to hold properties back from the market,” Vitner told MSNBC.com. “The process to [work through and re-sell] foreclosure inventory is lengthy and there just seems to be a lot of hurdles out there to getting these properties to market. A lot of the best properties have been in foreclosure and have already sold.”
Backing up that assertion, CoreLogic, a market analytics service, reports that residential shadow inventory — which includes foreclosures — fell to 1.5 million units in April, a 14.8 percent drop from the same month one year earlier.