RSSHome foreclosures set to rise sharply but this will have little impact on housing starts
The surge in foreclosures will accelerate the decline in home prices as more desperate owners try to sell homes they can not afford. All of the home price indexes recorded a steeper slide in 1st Q home prices. The price collapse makes new homes less competitive for a few months. Then bottom feeding investors, already circling like vultures over a dying animal, buy the discounted assets and take the homes off the market. Some will be held empty until prices improve, some will be repaired or remodeled and some will be offered for rent. First time homebuyers will also buy discounted homes. If you have no home to sell, this is the best time in decades to buy a home.
The foreclosure consequence for homebuilders and their suppliers is a brief worsening of their sales in exchange for an accelerated cleanup of surplus inventory, a necessary condition to permit a housing recovery to begin.
The foreclosure headlines will get much uglier as the housing collapse passes beyond the job site into the phase where homeowners, lenders, courts, FHA and the Congress argue about how to clean up the aftermath.
