The problem was in part that so many houses were put on the market in such a short time. So long as the banks controlled the selling, which perhaps they can't so long as mortages are still valid, they could've rationed the supply of houses that were being sold in order raise prices (much like OPEC does with oil), thereby eventually earning more money per house.No one who purchased a spec home is worried about renegotiating. The drop is value makes ownership undesirable. Better to walk away. And they did.
Friends in CA with a first and second which they have not paid in nearly 2 years are still in their home. This is not uncommon. Foreclosure comes after much forbearance
The bulk of the problem, as the story states, is not affecting primary residences.Housing market: 11.4% of all U.S. homes are vacant - Mar. 28, 2011Compare them with Connecticut, which has a vacancy rate of just 7.9%, the lowest of all the states. If you back out the vacation properties from the statistics, the states have very similar vacancy rates: 6.1% for Connecticut and 7% for Maine.
Some states have high vacancy rates even after backing out the second homes: Florida's is about 10%; Arizona's is 10.7%; and Nevada's 11.4%.
Besides Connecticut, the other states with lowest vacancy rates are California, Iowa, Illinois, Virginia and Washington, all at 9.2% or lower.
That is a substantial minority of what accounts for the overarching statistic, but it is still less than a quarter.