Last week I had the opportunity to participate in a video webinar panel discussion on how the outcome of the presidential election will impact bank-owned home (REO) sales and other distressed property sales, particularly from the perspective of real estate agents who work the REO and distressed property market.
Also on the webinar were distinguished panelists from PMH Financial, CoreLogic and REOSuccess TV. We recorded the webinar on Wednesday morning, the day after the election, so I wasn’t even sure that we’d know the outcome by that point. But as RealtyTrac boldly predicted the week before the election, President Barack Obama was able to pull out the victory.
RealtyTrac’s election prediction was the first topic addressed during the webinar, and I explained that we based our prediction on an improving housing market compared to four years ago in three key swing states: Ohio, Virginia and Nevada. We expected that voters in those states would be more likely to vote for the incumbent given a housing market that is better off than four years ago, and that if Obama was able to win only those three states he would be able to carry enough electoral votes to push past the 270 line needed to win the election.
Of course it turned out that Obama won even more of the swing states, giving him a comfortable edge in the electoral vote count. So the next question is what does this mean for the housing market overall and specifically for REO numbers and short sales.
The short answer that we cover in much more depth in the video above is this: Going forward we’ll continue to see the same stance from the federal and state governments we’ve been seeing since robo-signing hit in late 2010, namely prevent as many REOs as possible by making it more difficult to foreclose and by providing as many alternatives as possible to foreclosure. These alternatives include loan modifications under HAMP and other programs, loan refinancing under HARP and other programs, and short sales under HAFA and other programs.
I argued during the webinar that we’ll see some spikes in REO activity in some state and regional markets over the next year and a half as lenders clear out their backlog, but that we will not see a national trend of increasing REOs. Conversely we’ll see a trend of increasing short sale activity, both on properties that have started the foreclosure process as well as on those that have not yet started foreclosure, facilitated by changing attitudes among lenders and the recent short sale guidelines issued by Fannie Mae and Freddie Mac.
So the takeaway for real estate agents, as well as for real estate investors and owner-occupant homebuyers is simply to look at short sales as the primary source of distressed inventory over the next year and a half rather than at REOs.
Low Foreclosure Supply Pushes Sales Lower, Prices Higher
Swing State Housing Scorecard: Who Wins the Presidential Election with Real Estate Voters?
Election 2012 Housing Heat Maps: Is Your County’s Housing Market Better Off Than Four Years Ago?