These properties are losing real value every month they sit empty,
are stripped and vandalized and have yards choked with weeds.
How are you going to sell one of these in a year or so?

There is no way that the current inventory is under 10 months.
It doesn’t make any sense - the banks are still writing off losses in
mortgages in record numbers which means folks are still losing their homes
and the notices of default are climbing and climbing followed by the foreclosures and real estate owned properties seem to be stagnant?

There is something fishy going on… I truly believe that the banks are only releasing a small amount of REO’s onto the market and are hiding the really crappy ones in their books for fear that they are undermining the already shaky estate market.

Let’s face it… there are many people that simply left their houses in such a mess that only a major overhaul and remodel would make their property attractive to a potential home buyer.

So they are waiting for the market to recover to spill the REO’s onto the market?

Which leads to my question: If a bank owns the property, does the bank have
to pay the property taxes on these houses?

It would be really interesting to see some of these charts of price indices and futures normalized to inflation. I strongly believe that if we were to locate a inflation-oriented housing price trendline from a period of sensible house apprecation (such as the mid-90’s prior to the infiltration of dot-com money into the housing market but after the early-90’s correction stabilized), we should find a likely price support which, barring too much fed intervention or a lending apocalypse, should mark a bottom. Three to six months ago, it looked like this might come as early as next summer. With the current credit market, however, and the government’s attempts to put a band-aid on the mortgage industry’s gaping head wound, not to mention the likely pending doom from Alt-A and Option ARM recasts, the prices will likely fall below historic-inflationary levels until the financial sector starts to recover.

The excellent point to take home from today’s article, IMHO, is that prices are decoupling from the bubble and will not be stable until they find a bottom defined by wage sensibility. When we see prices suitable to purchase a median home with slightly-higher-that-median wages AND/OR when it becomes profitable to buy a house for the purpose of renting it out, the market should find a lower support. And hopefully, the next time it diverges, the fed will do the right thing and push the discount rate UP.