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TESS VIGELAND:So you’ve got US automakers on life support and the nation’s economy shedding hundreds of thousands of jobs a month. It’s the new normal, isn’t it? Shows how far we’ve come from the simple life back in oh, ’07. Just about everything being done to fix the economy depends, in part, on a real estate rebound. But it turns out the housing numbers we hear every month do not tell the whole story.
Marketplace’s Jeremy Hobson reports from New York.
Jeremy Hobson: Banks are holding hundreds of thousands of foreclosed homes. When house prices rise, the banks will release those cheap houses onto the market and potentially send prices right back down again.
Andrew Jakobovics is a housing expert with the Center for American Progress.
Andrew Jakobovics: There are about half a million properties that have been taken in foreclosure that have not yet made it onto the listings of properties that are available for sale.
The banks are doing this because they think they’ll get a better offer on the houses if they wait. It’s a delicate balance because empty homes don’t do anyone much good.
JAKOBOVICS: The properties sort of sit vacant and abandoned on some level and often the vacancy attracts blight and crime. People will break in, people will start squating. It really impairs the value of the properties.
As much as 10 percent, he says. Lewis Goodkin is a housing consultant in Miami. He says prices are also threatened by the people who are buying the bulk of the houses on the market right now. Half of South Florida’s sales, he says, are going to investors, who are just looking for a quick profit.
Lewis Goodkin: An awful lot of the stuff that’s being sold, of foreclosed properties, is being sold to speculators, investors — that when the market comes back, those people are going to be out there trying to sell that product.
That means even more houses on the market, which Goodkin says could drag prices down another 10 percent.
In New York, I’m Jeremy Hobson for Marketplace.
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