Homeowner limbo is the new pergatory for our markets

By
Real Estate Broker/Owner with Catarra Real Estate, Inc CA BRE #01191946

House in limbo

According to Corelogic, a company that tracks mortgage performance, there are nearly 12,000 homeowners in default in the San Jose metro area.  A number of them are in a new form of limbo where the bank tells them they're in default but hasn't moved forward with foreclosure or authorized a short sale.  This creates a very dark cloud for our local market because we don't know if that inventory will become available or not.

The homeowners themselves are stuck in limbo because the stay in the homes without paying their mortgages.  Others are still negotiating with their banks but not making any progress.  In the meantime, banks and HOAs don't get paid.

There are several major issues this could cause for our local markets.  These include:

- A large surge in inventory, especially at the low end
- A possible increase in HOAs going bankrupt due to unpaid fees
- A decline in neighborhood quality as poor homeowners abandon maintenance

In the Los Altos area, this isn't a problem.  It's also not an issue in Mountain View, Palo Alto, or Sunnyvale which all neighbor our town.  However, as we saw during the downturn, what hurts one market will hurt us all - eventually.

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Topic:
Real Estate Market Trends
Location:
California Santa Clara County Los Altos
Groups:
Realtors®
San Francisco Bay Area Real Estate
Tags:
los altos homeowner limbo

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Liz and Bill Spear
RE/MAX Elite 513.265.3004 www.LizTour.com - Mason, OH
RE/MAX Elite Warren County OH (Cincinnati/Dayton)

Bryan,

A wicked situation for all parties involved, and probably no easy nor quick resolution.

Jul 28, 2010 11:15 AM #1
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Bryan Robertson

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