Don't get snookered by the "housing prices have hit bottom" hype. It's just another scam to lure people back into the market.
The only reason that prices aren't still plunging, is because the banks have slowed the foreclosure process to a crawl to decrease supply. As we all know, when you decrease supply, you increase demand and prices rise. And that is exactly what's happening. But the temporary uptick in prices doesn't reflect the true condition of the housing market which is still in the toilet. There's just too many houses and too few buyers. Experts figure that there may be anywhere between 5 to 11 million distressed homes that will eventually be dumped on the market. That's going to push down prices and wipe out whatever equity you've managed to gain by making your mortgage payments. Now, take a look at this excerpt from an article in OCHousing News:
"Lenders hope they can solve all their problems by making the housing market hit bottom. If prices bottom, people who bought at the bottom gain equity with rising prices, and they in turn reignite the move-up market which will allow the banks to sell their high-end shadow inventory. Further, rising prices makes for fewer short sales and fewer foreclosures and distressed sellers become equity sales. Rising prices would be a panacea for lenders, which is why the full weight of our government and the federal reserve is working to make house prices go back up. They tried and failed to create a bottom in 2009. They hoped they had created momentum with tax credits in 2010. They failed.
"Lenders and the federal reserve are at it again. Mortgage interest rates are now down to 3.75%, and lenders are withholding inventory from the MLS to prevent further price declines. Again they hope they can create an artificial bottom and momentum to carry them through the liquidation of their distressed inventory." ("11.8% of all loans at least 30 days past due or in foreclosure," OCHousing News)
Bingo. It's all about creating the illusion of a "bottom." That's why the banks are withholding supply so prices start inching upwards convincing potential buyers that it's finally safe to get back in the water. Don't believe it; it's a trap. But, if you absolutely "must" buy a house, then at least consider this tidbit from Abigail Field over at Firedog Lake:
"Phoenix: RealtyTrac identifies 6,611 'bank-owned' properties there. An Arizona realty website lists only 275 for sale. Similarly, Yahoo real estate claims there's over 8,000 foreclosure properties in Phoenix, but Realtor.com lists less than 4,000 homes of any type. AZHomeonline.net lists a bit over 4,000, plus 312 foreclosures and shortsales. So are the foreclosures in Phoenix on the order of 300 or 6,600? Makes a wee bit of difference when the non-'distressed' market is about 4,000, don't you think?
"Phoenix isn't the only place where banks are holding properties off the market. In Portland, Oregon, banks aren't selling 80% of the homes they own, The Oregonian reports. All the bank owned inventory statewide represents more than a year and half's supply of houses all by itself, according to a RealtyTrac executive quoted in the piece. If the housing inventory is that distorted in Oregon, what's it like in the hardest hit states?" ("Bankers Are Still Wrecking Housing Market Fundamentals," Abigail Field, Firedog Lake)
Repeat: There are 6,600 distressed homes that should be "for sale" in Phoenix alone, but less than 300 of them are actually on the market.
Because the banks are trying to pull the wool over everyone's eyes. That's what this is all about.
Look; the banks have been keeping these mortgages on their books at artificially high prices. (Because of the goofy way the accounting laws are written) They don't actually have to report a loss until the house sells. So, if they decided to dump their entire inventory on the market pronto, then they'd be busted, right? And they don't want that, so they're going to play this ridiculous game for as long as they can, which means that the housing crisis could drag on for decades.
And, you know what? Phoenix and Portland are just the tip of the iceberg. The banks are working this scam everywhere across the country. (Where I live, the number of available houses for sale has dropped 31 percent in one year!) The banks have no interest in "streamlining" the process to get through their backlog faster. Why would they want that, for heaven's sake? So everyone knows they're broke? No, that's not what they want at all.
Did you know that it takes 31 months for a loan to be liquidated once it becomes 60 days delinquent?
31 months fer chrissakes! Now -- you tell me -- if the banksters really wanted to evict your sorry ass faster than 31 months, don't you think they'd be able to do it?
You bet, they would. After all, they own the government, the cops, the system, the whole shootin' match. If they really wanted to boot you out of their house, they could do it in a flash. But, they don't want that, because -- even if you're not making the payments, you're still cutting the lawn, and fixing the roof, and keeping the crackheads at bay.
Do you have any idea of how much it costs the banks to keep people in their homes who aren't currently making payments?
$60 billion a year, 5 percent of GDP. That ain't "chump change" by a long-shot.
But what other choice do they have?