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I've heard the idea that banks are keeping foreclosed houses off the market a few times. Do you know of a reference that describes the scale of that?

• AnthonyMouse 12y ago
  > I've heard the idea that banks are keeping foreclosed houses off the market a few times. Do you know of a reference that describes the scale of that? This estimates the number at 85-90% of foreclosures: http://realestate.aol.com/blog/2012/07/13/shadow-reo-as-much-as-90-percent-of-foreclosed-properties-are-h/ http://realestate.aol.com/blog/2012/07/13/shadow-reo-as-much... You can literally see it with your own eyes. Walk down a street in a working class neighborhood. You'll see plenty of homes with a piece of paper on the front door saying the house has been foreclosed and "winterized" but no realtor's sign or other indication that the house is on the market. Not selling foreclosures is completely rational behavior for the banks. The houses are usually on their books at the price the original owner paid for it, so selling it at the current market value causes them to take an accounting loss and makes the bank's CEO look bad. Meanwhile the homes are still assets they can collateralize and trade as securities without actually allowing anyone to live in them, which is all the bank was ever interested in anyway, and not allowing anyone to live in it keeps overall housing prices higher, which is more important to mortgage banks than anyone else in the world. Meanwhile the value of the home isn't actually going down, which is what would happen if they sold them at scale.