Your $tock Mom

“From now thru end of 2014, or even 2015, there are going to be over a million properties that are bank owned, in other words, REO properties. And what that tells you is, at least from the supply side, is that there’s an enormous amount of housing that is out there ready to be consumed, so to speak.  And unless there’s a corresponding increase in demand, you can count on the fact that house prices will be under serious downward pressure.”

Translated into losses in terms of the national average that you would expect in home prices over that period:  “What you can see today is that in some troubled markets, when a home is sold at REO, you’re seeing a haircut of between 20 and 40% off of the balance of the loan, so a significant decrease from the standard price of a home in that area. And so that’s what we’re worried about, is that you’ll see continuing losses and that will lead to just a reinforcing negative cycle.” – Kyle Lundstedt, Managing Director of LPS Applied Analytics

Tue 06 Dec 11 | 02:16 PM ET        (video 4:52)