Diana Olick Tells Us Not To Worry So Much About The Foreclosure Fiasco Freeze-Upward

Yesterday I warned you not to get faked-out by a rise in home prices at the end of the year. I figured that the stalling of foreclosure sales would take distressed, low-priced sales out of the data, resulting in an illusory home price rise.

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Diana Olick, who knows far more about the housing market than I do, says that I shouldn’t worry too much about the Freeze Up. Prices will probably just keep heading down.

Olick elaborates:

"Sure, it could even produce a momentary bump up in prices because you're removing all those bank-owned, discounted homes. I'm not sure I buy that theory.

First of all, fall/winter is the slowest season in housing, and prices reflect that. Of course there are all those "seasonal adjustments," but with so much demand pulled forward by the tax credit, and foreclosure/mortgage issues plaguing what scintilla of buyer confidence remained in the market, sales are likely to take a deep hit again.

We are already selling homes at the third worst pace on record, and that was including a 10 percent monthly bump up from August to September.

If sales plunge, inventories rise, and when inventories rise, prices fall." » Read More at CNBC.com