Banks have fewer foreclosed homes to sell than previously believed, but those holdings are likely to grow gradually over the next couple of years, a new study by Barclays Capital says.The investment bank’s latest calculations support the view that the U.S. housing market is stabilizing but that a major recovery isn’t imminent and there are still risks of falling prices…To get a sense of how many more households will lose their homes to foreclosures or related actions, Barclays tallies what it calls a shadow inventory, consisting of homeowners 90 days or more overdue on mortgage payments or already in the foreclosure process. At the end of February, 4.6 million households were in that category.Barclays expects 1.6 million "distressed sales" of homes—mainly foreclosures or sales of homes for less than the mortgage balance due—both this year and in 2011, then a slight decline to 1.5 million in 2012. Last year, Barclays estimates, such sales totaled 1.5 million. About 30% of all home sales this year and next will be foreclosure-related, forecasts Robert Tayon, a mortgage analyst at Barclays, who says that would be only about 6% in a normal housing market.
By James R. Hagerty, April 28, 2010 WSJ

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04/28/10 WSJ