by Calculated Risk on 9/13/2010 08:48:00 AM

Nick Timiraos has an excellent article on house prices and foreclosures at the WSJ: Banks' Plans for Foreclosed Homes Will Drive Market

The speed at which house prices fall over the next few months could depend ... on how banks decide to manage the huge number of foreclosed homes they own or may take from delinquent borrowers in the near future.

Unlike home owners, banks often are much quicker to slash prices to unload properties quickly.
...
"We see the perfect storm brewing with rising supply and falling demand," said Ivy Zelman ... She estimated that distressed sales could account for half of the market by year-end if traditional sales didn't rebound.

Usually house prices are sticky downwards and decline over several years, but the flood of foreclosures in late 2008 pushed down prices significantly in lower priced areas (Tom Lawler called this "destickification").

Something similar could happen again, especially in some mid-to-high end areas where prices are still too high, although it won't be the flood of foreclosures we saw at the end of 2008. But prices will fall.

There is much more in the article ...