What happens in economics when you have a sudden glut of sellers but few buyers?
i am talking about those homes that are in or near foreclosure. it is true that in some markets, they may have hit bottom, but until the excess sells, the market won't recover. as long as there are still people being "helped" by the government to delay the inevitable, the market can't clear because it doesn't know what it has. add to that, builders are building again. this is a bad thing. this leaves previously owned homes sitting in favor of new homes and leaves an excess out there.
in the short term, contractors will work, but in the long term, if the market has not recovered, those builders may find that they can't recover costs and this will further depress the market.
Liquidating all those would instantly make the banks insolvent AGAIN because once they're sold that loss shows up on the bankers balance sheet.
to some extent this is true, but the cost of maintaining those homes, even if all they do is hold them, is not helping the banks either. one way or another, they will take a loss and the faster it's done, the faster it's over.
That results in a net LOSS to HUD when they sell such homes since the realtor commission on HUD homes is $2500.
makes a good argument for getting rid of HUD, doesn't it?
if we do what you say and prices of homes drops below $2500, then we (the tax payers) end up paying for other people’s new homes.
we are anyway. we are paying for the eternal refinancing and all the other government programs that they keep coming up with. again...what is the government doing in the housing business? if they were not there, we would not take a loss. regardless, the above holds true. better a feast deep pain that is felt and then done with.
Now they live a life of luxury and only have to spend about 10 hours a week to make 6 to 7 figures from flipping.
don't think i'd get into flipping, but it's a great time to become a slum lord ;)