Economists have been warning that a flood of foreclosures will soon be hitting the real estate market, likely this summer. Increases in foreclosures traditionally pull down nearby home prices. So should home owners be worried?
As of now, housing reports continue to show month-over-month drops in foreclosures. CoreLogic released a report late last week that showed completed foreclosures fell from 71,000 in January to 65,000 in February.
But as more banks look to clear a backlog of defaulting home loans from their books, economists say the public should expect a turn with foreclosures and the numbers are expected to soar in the coming months. Mark Fleming, CoreLogic’s chief economist, expects the wave to hit this summer.
However, Fleming doesn’t view the increase as a bad thing for the overall housing market. “I would like to see the pace increase, because that means we’ll be able to work off the inventory faster,” Fleming told AOL Real Estate. He says that recent improvements in the real estate market and economy may mitigate any traditional downward pressure seen on overall home prices by foreclosures.
In fact, despite an increase, Fleming still expects home prices to rise in some markets.
RealtyTrac has predicted that completed foreclosures will jump 25 percent this year, reaching 1 million.
“All of this will result in more foreclosure pain in the short term as some of the foreclosures that should have happened last year instead happen this year,” Daren Blomquist, vice president of RealtyTrac, said in a public statement in February.