Falling house prices should facilitate a buyer’s market; not so, according to the Wall Street Journal. A decline in prices, especially in the last few quarters, is making sellers reluctant to give discounts, and without the reassurance of a discount, buyers are hesitant. This awkward catch 22 has inspired a growth in interest in bank-owned foreclosures which are, to buyers’ frustration, being snapped up by wealthy investors willing to pay cash.
Sellers are also having problems competing with foreclosures: At the current sales pace, it would take more than 16 months to sell all the listings in Long Island. A balanced market would be closer to six months.
With foreclosures in such demand, mortgage companies are running into processing problems, limiting the flow of foreclosure properties in states such as New York, New Jersey and Florida. [WSJ]