It’s no secret that the housing market has seen better days, to put it politely. In a typical market, distressed properties account for 7% of all home sales. Some estimate that nationwide, that number is currently around 41%. Louisville real estate is far below both of these.
Also looking strong is Louisville, Ky., a city whose low foreclosure rate — only 1.15 percent of homes are in foreclosure, half the national average — illuminates it as one of the cities least affected by this aspect of the dramatic housing market collapse of the past three years. Louisville had less of a market boom than coastal cities and vacation destinations, so it didn’t have as far to fall. [source]
Last week came the news that several of the major lending institutions are putting a freeze on foreclosures proceedings due to allegations of mortgage fraud. In the near term, this is certainly good news for homeowners currently behind in their payments and are trying to avoid foreclosure.
Some have said that they’ve been foreclosed upon unjustly and now it seems there might be truth to that accusation. Class action lawsuits have sprung up around the country.
In at least six states, attorneys general are calling for foreclosure moratoriums and launching their own investigations. And this week, the attorneys general of up to 40 states are expected to announce a joint investigation into banks’ use of flawed foreclosure paperwork.
With so much uncertainty with the larger lending institutions and whether or not fraud has been committed, the larger housing market is likely to continue to stall throughout the nation. We’ve already seen a drop in home sales here in Louisville.
One thing is certain, there needs to be improvement to the home loan process. For starters, the needs to be a reduction in the amount of unnecessary red tape and an increase in the amount of transparency.
What does this mean for the Louisville home buyer?
The KCM Blog highlighted an amazing quote by John Paulson who made his billions shorting subprime mortgages before the housing recession.
“If you don’t own a home, buy one. If you own one home, buy another one. And if you own two homes, buy a third and lend your relatives the money to buy one.” – John Paulson 9/27/2010
Every situation is different but you owe it to yourself to educate yourself, identify the opportunities and decide if buying a new Louisville home, either for yourself or as an income property makes sense for you.