Underwater Borrowers May Float Again

Altos Research says their study indicates the inventory of homes on the market is a third below where it was last year, and half of what it was at the lowest point when the housing bubble burst. The low inventory is pushing prices up as demand increases. Are the banks holding out, hoping for a better price, and fearful of tanking the market if they put too many homes up for sale? Altos says no, lenders have learned to identify and accept reasonable deals. It’s the consumers, the underwater borrowers who see the prices slowly begin to rise. People who watched their homes lose 40 percent of value in 2008 now see the benefit of riding out the storm, MHProNews.com has learned. Some of that value has returned, the thinking goes, so why not wait a little longer and perhaps that 40 percent loss may become only a ten percent loss. If the borrower can afford to wait long enough the loss may be wiped out altogether.

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