The White House has proposed and implemented a number of programs over the last couple years aimed at tempering the housing downturn… the first time buyer tax credit, the Home Affordable Foreclosure Alternatives (HAFA) program, and the Home Affordable Modification Program (HAMP) are a few good examples.

The success, or lack thereof, of these programs has been widely debated, though it is relatively safe to say that these programs at least acted as band-aids as the White House attempted to stop the bleeding. Were these programs ever believed to be able to completely turn around a struggling housing market? Likely not.

Nationally speaking, two of the largest concerns moving forward are that A) the "shadow" inventory of foreclosed homes the banks have yet to release to the market will delay a return to historic and healthy appreciation levels and B) the large amount of existing underwater homeowners will choose to let their homes slip into foreclosure. It is extremely important to note that this is nationally speaking and that the local conditions in the Seattle and King County area differ greatly from the national conditions. In Nevada, for example, it is estimated that approximately half of homeowners are underwater on their mortgage (owe more than what it is worth). To put that into perspective, 1 in every 118 housing units in Nevada received a foreclosure filing in September 2011 as opposed to only 1 in every 1339 in Seattle or 1 in every 1725 in Bellevue.

Regardless of the differing local conditions, the national trends and sentiment do affect buyers in our area by keeping many of the concerned on the sidelines. There are legitimate concerns that a combination of underwater borrowers and shadow inventory will delay the amount of time it takes housing to get back to normal nationally. This is where the Obama Administration's plan to sell off large chunks of foreclosed homes to private partners comes in.

The White House is currently mulling over ways to sell as much as $30 billion in foreclosed homes that are currently on the books of government-run Fannie Mae, Freddie Mac, and the FHA, and a number of large fixed income funds are interested. Click on over to this Yahoo! Finance article for a more detailed analysis of where things stand with the evolving plan.

Though the plan does raise cause for concern as any action of this level would, locally speaking the positive effects may outweigh any negatives because the greater Seattle area does not have the extensive shadow inventory other states/regions have. Things here are and have been relatively normal for much of 2011, and a bump in the national sentiment towards housing that could result from such a plan would certainly be welcomed.

Regardless, the pros and cons of this proposal, like all of the previous proposals implemented by the White House, is up for debate...

- Robert E. Wasser, Seattle and Bellevue real estate trends analyst