Based on the latest events, it is safe to stay that Short Sales listings in San Jose are not just here to stay but in fact will likely increase and represent an ever-growing majority of homes sold in the coming months in many San Jose neighborhoods. Here is why.
Banks are currently catching up on new short sales and foreclosures guidelines, revolving mostly around greater transparency towards homeowners in default. All major banks are staffing up (in thousands) to comply with these new regulations enforceable by Mid-June. Expect many short sales requests not to be processed before these rules are in place.
Some real estate markets in San Jose are saturated with foreclosed and REO homes, which banks cannot move fast enough at good prices. Based on the law of supply and demand, expect prices to continue to drop but also a wait a see attitude from lenders towards approving more short sales in the near future until the inventory available on the market is down.
Short Sale is now becoming a strategic option for financially-stretched families to walk out from a home which lost too much of its value. Many homeowners are pondering how much longer they can afford to pay for a home that will not recover its past value for at least the next 10 years, and against which they can borrow virtually no equity. Unless they find a way out of their mortgage payment now disconnected from the current value of their homes, they will not be able to buy their next house for a long time. As a result, many of them opt for a short sale and start negotiating with their lenders with the help of their Realtors. To some extent, a short sale is no longer the answer for distressed families but an exit strategy for homeowners faced with a financial hardship caused in particular by high mortgage payments.
The foreseeable outcome of the last trend is that many San Jose homeowners, precluded to buy after a successful short sale, but less financially stretched in a few years, will eventually come back to the market to buy again their homes. Real Estate is a never-ending cycle...
© Sophia Delacotte CDPE, SFR, CHS
San Jose Realtor
Cell: (408) 717-2575