It has been said that a small foreclosure surge will not significantly effect the sales of homebuilders this year because home sale inventory and new construction have fallen quite far below average levels in a lot of cities. Although it would be preferable not to have any more supplies come through foreclosures, a bit more will not totally hurt the markets.
After the housing boom collapse, foreclosures ended up soaring, which produced a glut in a lot of markets and sent home prices down. This resulted in homebuilders struggling to entice buyers into their homes instead of the discounted homes owned by banks. However, recent steady sales in a lot of markets ravaged by foreclosures have slowly sent down the amount of these homes in today’s market.
Additionally, a lot of banks slowed down the process of foreclosure, occasionally choosing to modify mortgage loans at risk. This also ended in less bank-owned properties in the market.
Naturally, the last thing anybody would wish to see is a flood of foreclosures, as predicted by economists who stated that it would happen if borrowers that have option-ARM mortgages choose to default in the near future. A lot of their loans are scheduled for resets, which could possibly trigger big increases in monthly payments.
This does not mean that marketplace concerns should be forgotten. Naturally, risks do exist that are very real and they should never be shoved aside for anything.