Quote:
Originally Posted by trndobrd
I would love to buy a couple properties for $0.04 on the dollar and start my career as a slum lord.
How does forced sale of homes at rock bottom prices ease the housing glut?
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How does decreasing prices increase demand? Is that really your question?
In normal circumstances, homeowners lower the price when homes won't sell. Because home prices are falling so much across the board, sellers aren't able to drop the prices enough because they have to cover their notes. This is creating an artificial price floor which is above the demand price. As a result, nothing moves.
Eventually, prices will reach equilibrium because the banks will sort through their inventories and unload everything. Because the banks are not capable with dealing with such a huge amount of properties being returned to them, this could take several years.
The houses have already lost their value, and thy are only going to lose more value as they deteriorate due to lack of upkeep. Why not just stop delaying the inevitible and start auctioning them off? At least we can start collecting property taxes, discourage theft, and re-gentrify some of the neighborhoods than have become blighted?