Are Foreclosures Good For The Housing Market?

The underlying belief in the country, whether one considers a social worker, a professional or the common man, is that foreclosures and short sales are not good for homeowners or the real estate market in general. In fact, it is this premise on which many states have put in place stringent anti foreclosures laws. However, now that some time has passed and the results of these measures are coming to the fore, experts are stating that these anti foreclosures laws are turning out to be counterproductive for the real estate market in general.

According to a recent study conducted by the United States Federal Reserve, states that require judicial reviews for bank foreclosures are more likely to suffer from a slow turnaround of the real estate market than others.

The prime example of the aforementioned fact is that the Nevada real estate market is one of the few markets in the country that is not showing any improvements or even signs of improvement. This is surprising for many because the state, after the 2008 real estate crash, actually put in place borrower protection laws that are considered to be one of the most stringent in the country.

One of the main reasons for this phenomenon, as per many experts of the industry, is that with fewer bank  foreclosures in the market the inventory suffers, resulting in a false price bubble. Similarly, as homeowners with poor credit get to stay in homes that they know they will be leaving in the future, the result is that they fail to maintain it, which reduces its prices further.

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