HOW’S THAT HOPEY-CHANGEY STUFF WORKIN’ OUT FOR YA (CONT’D): Only Half of Fannie Mae’s Previously Foreclosed Homes Are On The Market Or Being Prepared For Sale. It’s almost as if they’re witholding inventory in order to keep housing prices up until the election.

UPDATE: Reader David Smith writes: “That post is an undeserved cheap shot; Ed DeMarco, the FHFA Administrator, has been a model of probity who has resisted Administration calls for dubious bailouts. It takes a long time to pass these gallstones through the system.”

Well, if it was unfair, I apologize — not for being suspicious, given the Administration’s record, but for being suspicious of the wrong guy. On the other hand, there’s this email:

I’ve been trying to buy a house all summer, and my initial direction to the agent was “full price is for suckers”. Short sales and foreclosures only, please. During this process I offered on 3 houses, and in each case (until the 3rd, where I got lucky) I had the distinct impression that the owners/banks were in no hurry to sell. The first one was a foreclosure that needed $20-25K of work, where the asking price was the same as a renovated house with the same floor plan down the street. The second one was very nicely renovated…for $72K more than the same floor plan down the street. And the third one was a renovated short sale for 15% below current market value…that I’m still waiting for HUD to approve the FHA loss from the current owner (bought for $275K in 2007, selling to me for $235K).

During this process it struck me that somebody has made the calculation that it’s smarter financial policy for them to keep these houses empty and pay the upkeep than to accept a discount on the price. Considering that this policy appears to be implemented industry-wide: Fannie Mae, the banks, HUD, is there an argument to be made that the prices are being fixed? Alternately, I’ll be paying as much in mortgage as I am in rent (thanks 3.25% interest rate!) so this won’t impact me until it’s time to sell.

Love the blog, keep up the good work!

James in Denver

At any rate, the overhang suggests that housing prices won’t be making any significant jumps in the near future, with so much inventory still out there to be cleared.

ANOTHER UPDATE: Reader Rob Crawford writes: “I’ve seen multiple homes offered under terms that made no sense unless they didn’t want to sell. One home — that I was seriously tempted to buy as-is — was copper-stripped and water damaged, but only available if you committed to living in it full time for at least a year.”