The rising costs of carrying foreclosed homes are prompting banks to sell them off for as little as half of their original value, reports the Wall Street Journal, a strategy that’s costing financial institutions big money. The losses, and the specter of their continuing to rise, pummeled bank share prices by 10% or more in trading yesterday.
Nearly three-quarters of a million homes are now bank-owned—2 years ago, the number was just 112,000—with some experts predicting an additional 432,000 to be repossessed by 2009. They're piling up faster than they can be sold, the Journal reports; Fannie Mae owns more than 50,000 as of June 30, though it sold more than 23,000 in the first half of the year. On the bright side, falling prices have attracted bargain hunters back into the market in areas like Los Angeles, San Diego, Miami, and Las Vegas.