This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

When Foreclosures Are Good for the Housing Market

This is, of course, not good news for borrowers in default who may be hoping to stay in their homes.

But, ironically, a steady supply of foreclosed homes might actually help buyers in most markets.

The number of homes available for sale at the end of 2012 was at an 11-year low, according to National Association of Realtors. According to data from, inventory declined 16.5% from a year earlier in January.

The shortage of homes available for sale is driving prices higher, resulting in bidding wars in some cities and sparking concerns that another bubble might be starting.

Rising home prices should normally encourage more Americans to sell their homes to trade up, but the crisis has left millions owing more than their homes are worth. Many are still on the fence, waiting for prices to move up further so that they can sell at a profit.

The supply from new construction, meanwhile, is likely to take a while to hit the market.

So it turns out that foreclosures are now welcomed in some markets where buyers are struggling to find a good bargain.

Foreclosures are no longer so much a drag but a "stimulus," according to Blomquist. In markets where foreclosures are on the decline, prices are rising. In others where foreclosures are rising, they are providing inventory to buyers.

The bottom line is, volatility in foreclosure levels may not matter so long as underlying demand remains strong.

-- Written by Shanthi Bharatwaj in New York

>To contact the writer of this article, click here: Shanthi Bharatwaj.

>To follow the writer on Twitter, go to

>To submit a news tip, send an email to:
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
XLF $23.17 -1.50%
XHB $33.52 -1.40%
IYR $77.23 -0.45%
IYF $86.58 -1.40%
AAPL $95.35 1.80%


Chart of I:DJI
DOW 17,764.74 -126.42 -0.71%
S&P 500 2,062.53 -18.90 -0.91%
NASDAQ 4,770.89 -46.7040 -0.97%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs