Real Estate sales are improving?
Tuesday, May 12th, 2009THE GOOD NEWS: The inventory of previously owned homes on the market dropped to 3.7 million in March from 3.8 million a month earlier and this is down from 4.6 million in the middle of 2008.
THE BAD NEWS: U.S. banks held $26.6 billion of repossessed real estate at the end of 2008, more than doubling from a year earlier, according to the Federal Deposit Insurance Corp. in Washington. The banking industry lost $26.2 billion in the fourth quarter, the largest loss in FDIC records.
Until the banks sell off this massive inventory, real estate sales will continue on the pace seen in the past six months. Instead of giving the banks loans at less than 1% to prop them up, the Federal Government should offer to buyers of bank owned property mortgages at 1% through FNMA or FHA. Taking this property off the market will increase the value of properties owned by the general public and improve the balance sheets of the banks. It’s a ‘win win’ situation.