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What Comes Next?

by Charlie Allred

Arizona short sales have been steady of late… I see this continuing. In fact, a recent article in the Wall Street Journal reported that:

The mortgage crisis and rising foreclosures have wiped out more homeowners than were created from 2000 to 2007. Homeowners made up 66.5% of Americans at the end of 2010, the lowest rate since the end of 1998.

So I ask you dear reader; what comes next? I have made the argument that short sales and other forms of moving property from the category of “at risk” to “newly sold” will continue or perhaps even increase in the coming year… Do you see anything different?

With the current economic environment being what it is with high unemployment, diminished savings, and outrageous consumer debt both secured and unsecured; how is it possible to quickly correct the property market?

I don’t think it is… I see more short sales in Arizona as the economy continues to bounce along on its sideways path.

The real problem is buyers. Or should I say a lack of buyers… With so many lacking proper funds for a down payment and with banks increasingly suspicious of even relatively high credit scores how can prices move upward?

The Fed obviously want to create inflation to stem the drop in housing prices, but we still have banks and lenders holding a tremendous amount of shadow inventory on the books. When released, this extra inventory can only further disrupt the supply demand balance and cause prices to fall even more.

Those who are underwater will stay there. If your goal is to get out of a burdensome debt, then an Arizona short sale may be for you.

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