The Spanish property crash continues unabated and it is now getting to the point where the massive – and we do mean massive – amount of repossessed property in Spain is in danger of bringing the country to it’s knees. Despite the quiet injection of 60 billion Euros by the European Central Bank in to the Spanish property market by way of covered bond purchases in May, 2009 – we have now reached the point of no return we feel.
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Well, one thing 2009 bought is a potentially vast pool of foreclosure property to invest in. So – where is the best foreclosure market to invest in?
The United States? The amount of bank owned property sloshing around is quite stunning. Not including the ongoing devaluation in the commercial sector, the US banks now own an estimated 22 million foreclosures and are likely to add another 7 million to that over the next 2 years. No one really talks about this and industry insiders refer to it as “shadow inventory,” because much of it is not actively for sale. Where do you think all that lovely federal reserve money went? What little that did not make it’s way to a numbered bank account in the Cayman’s went to prop up the banks deemed “too big to fail,” and allow them to keep these TWENTY TWO MILLION residential properties off the market. Much of this “shadow inventory,” is in Nevada, California, Florida and will not appeal to the overseas buyer unless it is within a few hours of an international airport – which much of it is not. The other question is – if it ever gets to the point where these properties are released onto the market – any one holding any stock is going to see that value plummet overnight. Caveat Emptor.
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