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Is the Market Ready for More Distressed Properties for Sale?

The supply of distressed properties for sale is expected to expand further in the coming months as investigations into alleged faulty processing of foreclosures wind down. A federal judge has recently approved the settlement deal between lenders and attorneys general of U.S. states and this is being seen as a signal for banks to dump into the market the foreclosures that were caught in the pipeline during the investigation.

Lots of Blue Little Distressed Houses

However, most housing market analysts believe that the sector can handle the potential increase. They claim that the busy homebuying segment will offset the otherwise debilitating effects of additional supplies entering the market.

Prices to Drop Further?

Some housing industry observers are predicting that prices of dwellings will decline a further 10% before the year ends as more distressed houses are pumped into the market. However, a number of housing experts have asserted that although prices will drop as predicted, the market will not go into another crisis as home buying activities will be enough to offset the additional burden.

A report from the National Association of Realtors has shown that vacation home and investment home sales surged by 64.5% in 2011 compared with one year ago. This trend is expected to continue on for the rest of 2012, especially when more foreclosed houses are introduced into the market.

Lenders Getting Wiser

Most analysts also assert that the price decline is inevitable and is actually needed to flush out more foreclosures out of the housing sector's system. They also believe that lenders have become wiser when it comes to handling foreclosures, with most of them letting troubled owners stay in their homes longer in exchange for a compromise that often includes lenders shouldering home insurance to ease the burden on homeowners.

Housing experts further added that getting the distressed real estate out of the pipeline and into the market will help the recovery of the housing sector in the long run. They argue that it is much better for them to be out in the open and accounted for, instead of lurking inside lenders' books.

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