Repossessions Rise as Defaults Drop
Lenders repossessed more homes in August than they have since the beginning of the housing crisis even as the number of properties entering the foreclosure process declined for the seventh month in a row, according to foreclosure listing firm RealtyTrac Inc.

Banks have increased foreclosures to clear out their inventories of bad loans, but despite repossessing 95,364 homes last month, they still have thousands to go, estimates Rick Sharga, RealtyTrac senior vice president.

Analysts predict that this shadow inventory will prevent home prices from bottoming out, despite a 28 percent decline in prices from 2006.

“Whether it’s the sidelined, shadow, or current inventory, the issue is there’s more supply than demand,” said Oliver Chang, Morgan Stanley housing strategist. “Once you reach a bottom, it will take three or four years for prices to begin to rise 1 or 2 percent a year.”

Source: The Associated Press, Alex Veiga (09/16/2010) and Bloomberg, John Gittelsohn and Kathleen M. Howley (09/15/2010)