Home Prices May Withstand Foreclosure Wave

Teke Wiggin

At best, an increase in foreclosures takes a double-edged sword to the housing market. On the one hand, it means we may be inchingtoward stabilization, as shadow inventory begins to move through the pipeline. On the other, it spells more stress for beleaguered homeowners and puts downward pressure on home prices.

Housing economists predict that the next wave of foreclosures is about to hit, following the recent settlement between government and lenders in the "robo-signing" scandal. No doubt it will still cause pain to hard-pressed borrowers. But in a break from the past, it may avoid depressing home prices.