Think of home foreclosures as a rat moving through the gut of a boa constrictor.
The bulge of foreclosures inches its way through the courts, but at a certain point is absorbed into the larger housing market, adding fat that must be worked off.
In the Tampa Bay area, despite slight month-to-month declines in foreclosure cases, many have detected just such a bulge. And the real estate market is supposed to absorb it right around June.
This time we're not talking about homeowners defaulting on adjustable-rate mortgages resetting higher this spring and summer. Other factors are feeding our local bulge:
A voluntary foreclosure moratorium proposed by Gov. Charlie Crist during the fall applied the brakes to thousands of cases. That moratorium ended in February. Banks have been loath to load up their books with too many confiscated houses at once. Bottlenecks clog the courts.
Defense attorneys have grown more skilled at dragging out foreclosures for a year or more. The latest delaying tactic is demanding paperwork of banks to prove what investors in what countries bought the mortgage-backed securities that funded the loans.
Realtors in Tampa and St. Petersburg report that bank-owned properties for sale have subsided a bit from their high-water marks. One agent who markets repossessed homes said her listings dropped from 100 to 73 recently. But she expects a flood as the court backlog unjams in the next few months.
What does it mean for most of us? More cheaply priced foreclosures on the market postpones the housing recovery and drives down prices. Prices won't stabilize until 2010 — if we're lucky.
A word of caution: Talking heads last year predicted a tsunami of foreclosure filings in June 2008. I can't speak for the rest of the country, but that tidal wave never hit our shores.
But if you plan to sell your house in June, you'd better brace yourself for a lot of bargain-priced competition.
James Thorner can be reached at email@example.com or (813) 226-3313.