2011 – The Year of Foreclosures?

Foreclosures are nothing new since the real estate bubble burst, about a million homes were repossessed last year. In 2010 many foreclosure actions were stopped because of questions about the procedure and documentation that the banks use to repossess homes. These properties will likely join the numbers of new foreclosures this year and 2011 is thought to be the ‘peak’ in foreclosures, according to Rick Sharga, a senior vice president at RealtyTrac.

The Seattle area is still fairing better than many other metro areas in the nation, but foreclosures are increasing here as well. RealtyTrac lists one in every 682 homes in King County received a foreclosure notice in December 2010. In Seattle, one in 928 homes.

What does this mean for you?                                                                                                     Well, that depends…. are you thinking of selling? buying? investing? Just staying put in your home and paying your mortgage?

If you don’t need to sell, don’t sell this year. The market will be flooded with bank owned properties, buyers will expect you to match the prices of the competition. Couple exceptions to this I would say are… if you need to sell in the 2-3 couple years… might as well do it now while interest rates are low. Our prices are not going up soon, and if interest rates increase, there will be less buyers. Also, if you can afford that larger (more expensive) dream home, now may be time to take a loss on your current home to gain the deal on the next step up.

If you are buying you are in a good position, with choices, negotiation power and low interest rates. Are prices going down more? Yeah, maybe… but timing the bottom is hard. Stop obsessing on getting the absolute best deal and buy when you are ready, can afford it and find the property you can call home for several years.                                                   Investing? Lending is tight for investors but not impossible. Cash talks and there are many deals out there for those with means.

Staying put? It may irk you to keep paying that mortgage for a home you know has lost considerable value from when you purchased it, but just be happy you are not one of your neighbors who simply can not keep his home. First and foremost, real estate is your ‘home,’ your sanctuary. Yes, Real estate is also an investment, but it is, and always has been, a ‘long term’ investment and before long we will see slow (normal!) appreciation once again.