Analysts are projecting the housing price rebound in the Washington area with some trepidation — with the recent lulls in foreclosure filings, a lot of distressed homes are still waiting to hit the market. The national investigation into foreclosure processes that slowed down filings in recent months is expected to wrap up during the first half of this year. If lenders release those held-up foreclosures all at once, analysts believe the housing market could return to the2008 crisis.
That year, home prices nationally saw a 20 percent slide, with houses in some markets losing half their value.
“As lenders raced to put inventory on the market, effectively everyone was undercutting everybody else — that really drove everything down at a remarkable rate,” said Alex Villacorta, senior statistician at Clear Capital, a real estate trends tracking firm.
If lenders repeat that in 2011, it would devastate the market.
In a recent speech to the Urban Land Institute, FDIC Chairwoman Sheila Bair, said she still sees “lax underwriting” from mortgage providers and noted the robo-signing scandal that surfaced last year gives her doubts about whether lenders have really reformed their ways.
But others hope banking institutions won’t repeat the mistakes of 2008 that led to one of the biggest housing busts in U.S. history.
“If they were to flood the market all at the same time, all these assets will lose value and they’ll compound their losses,” Villacorta said. “I think they’ve learned their lesson.”
– Liz Farmer
