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Will Foreclosure Inventory Hurt Home Prices? No

Our buyers continue to express concern that the continued onslaught of foreclosures coming to market will depress housing prices. There are supposedly as many as a million unsold foreclosures or pending foreclosures in California alone, and, per the Wall Street Journal, there are about 5 million potential foreclosures coming to market nationwide over the next few years.

We think the fears are overblown b/c during “the boom”, about 4 million new homes were built per year, and during normal times, our economy absorbs about 2 million homes per year. Right now, very few new homes are getting built, leaving ample room for the foreclosure inventory. Furthermore, the economy overall will come back, and when it does, so will “normal demand” for housing. Normal demand is the demand over and above that driven by abnormally low rates, low prices and tax advantages.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167