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February 18th, 2009 3:29 PM by David W. Welch
My post from February 11 has been featured on www.talk.realtor.com the www.realtor.com blog. Click it http://davidwelch.featuredblog.com/?p=168
A similar program was started about six months ago that was supposed to help 400,000 homeowners. My understanding is that only 44 mortgages have actually been modified. I am certain there have been lessons learned from that failed attempt, but I still have serious reservations that this plan will have much more effect. Just look at the vacancy rates in many of these markets. Orlando was recently named one of the emptiest cities because of the vacancy rate of 7% for rental properties. There are some areas hit hard by foreclosure that have vacancy rates in the double digits. These people do not want their home saved, because it is no longer their home. Additionally, why would lenders want to extend any more credit to home owners that are already not paying their mortgage?
I do believe that we need to help those who want it, but I think that number is a lot smaller than President Obama and his advisors think it is. They may be offering to help nine million, but if I had to guess there are not even one million that will take the help. Take the money and buy up the foreclosures already on the market. I believe there are somthing like one million homes that have been foreclosed already. That will go a long way toward stabilizing the housing market, stabilizing prices and turning public opinion around regarding the direction of the market. There are currently 3.7 million homes for sale, selling at a pace of about 5 million a year. If a normal market has six months supply of homes for sale, there should be 2.5 million homes on the market. If Uncle Sam buys up one million foreclosures that would leave 2.7 million or a six month supply on the market.
David Welch, Real Estate Optimist