While Calculated Risk warns us that many more listings are ready to come onto the market — and they are willing to talk about where those listings are coming from — CNN is busy fanning the froth, warning that buyers should snap up foreclosures now before it’s too late.

In CNN’s defense, the sensationalist headline masks a true story. Many properties are going into multiple offers, and it’s not just bank-owned properties. Anything priced right for location and condition is moving fast. So, CNN advises, make your “highest and best” offer first and don’t try to haggle. The frantic buying is even worse in the lower end, as investors compete with first-time buyers for homes that can be purchased cheap and fixed up relatively easily.

Foreclosures and other distressed properties won’t be going away soon, with bankruptcy rates rising 34% year-over-year (the highest level since the bankruptcy reform bill of 2005). Add to that the fact that banks are very reluctant to actually modify mortgages. When only 9% of eligible loans are getting modified, it’s a good bet that some portion of the remaining 91% will hit the market at some point. How much is anybody’s guess.

Meanwhile, on a nationwide level we have high buyer interest, low apartment occupancy, rents going down, no sign to a meaningful slowdown in the availability of distressed properties, and many cash-strapped consumers (including the unemployed and those who are declaring bankruptcy). For the moment, the buyer interest is overwhelming the negatives to the market overall. Whether that continues is anyone’s guess.

ONE MORE IMPORTANT THING!  If you are in the middle of an FHA financed purchase, be prepared for transaction turbulence. Taylor Bean, the 12th largest mortgage lender and one of the top 3 FHA originators, is stopping all mortgage originations immediately. Call your mortgage professional first thing in the morning to ask if this effects you in any way!