According to CNNMoney report, as the $26 billion foreclosure settlement deal helps the hundreds of thousands of troubled homeowners, it will also flood the market with new foreclosures.
Many lenders held off foreclosure procedures as they wait for the final decision of the complex negotiation between 49 state attorney generals and federal officials.
Daren Blomquist, Vice President of RealtyTrac, online marketer of foreclosed properties, estimates that new filings will climb from 1.9 million in 2011 to between 2.2 million and 2.5 million this year. A surge of home seizures may drive down values, at least for a while, in a fragile market.
Rich Sharga, Executive Vice President for Carrington Holdings, a real estate firm says, "The market needs to clear out a lot of the distressed inventory before prices start to come back."
According to the S&P/Case Shiller index of values taken in 20 U.S. metropolitan areas, home prices have dropped 33% from their July 2006 peak. In CoreLogic Inc report, a real estate data provider, about 11 million U.S. homeowners have negative equity, which means that they owe more on their mortgages than their homes are worth.
Investors are likely to buy many of the foreclosed homes that come on the market to take advantage of low prices and demand for rentals, said Mark Zandi, Chief Economist for Moody's Analytics Inc. According to National Association of Realtors (NAR), about 21%of home sales in December were investor purchases.
With the continuous falling of housing prices, the all-time low mortgage interest rates and the government programs that make it easier for the US citizens to own their home. Now, is definitely, the right time to buy!
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