IRVINE, Calif., May 23 (UPI) -- U.S. banks and money lenders now own 872,000 homes, a number that could more than double in the coming years, real estate research firm RealtyTrac said.
The current number of properties owned by banks and lenders is nearly double what they owned in 2007, before the housing market began to collapse, The New York Times reported Monday.
Lenders frequently sell homes at a substantial discount and economists expect it will take three years for lenders to sell the properties they have taken over.
That means for the next three years at least, the sale of so-called distressed homes will continue to slow a recovery in the housing market.
"It remains a heavy weight on the banking system. Housing prices are falling, and they are going to fall some more," said Mark Zandi, chief economist of Moody's Analytics.
Moody's has predicted home values could drop an average of 5 percent by the end of 2011 before making a slight comeback in 2012.
A separate real estate research firm, Trepp, said lenders could lose $40 billion by selling homes at discounted prices.
Lenders are also aware that while they sell homes at discount prices, "We are contributing to the downward spiral in market values," said Eric Will, who manages distressed home sales at the Federal Home Loan Mortgage Corp.
"We want to make sure we are helping stabilize communities," Will said.