Written By Charles Sells

Industry experts forecast foreclosures to rise 20% in 2011. There are an infinite number of variables to cause the rise and quite honestly, I could have 3 months of articles/blogs on each variable. My first blog of 2011 alluded to one major cause in the spike of foreclosures – moratoriums causing false sense of recovery. If you put a “temporary hold” on foreclosures by banks, that doesn’t mean people suddenly started to pay their bills, does it!? Instead of the natural progression of foreclosures coming to market a few hundred at a time, we have these “holds” being lifted that hits our economy like a broken dam. Instead of foreclosures quietly trickling into the market, they are flooding the market and causing waves of concern.

What does this mean for the 2011/12 market? As an investor, not much. 2009/10 showed declining numbers in foreclosures, because the numbers were a big fat lie, courtesy of our political leaders. The foreclosures were still happening, but they were not coming to market. This “strategy” insults the intelligence of every American. As a comparative to this concept I would provide the following analogy; If a farmer chose to not take his oranges to market for two months, does that mean his trees stop growing oranges at the same time?