Once again I appreciate the helpful feedback.
I think the banks are setting the agenda for the most part in this market. Granted, the discontinuation of mark to market accounting has given them some breathing room to unwind their distressed residential loans in an orderly manner. However, most of them are seeing a rising tide of faltering commerial loans as well, as commercial lags residential. So I think they have to decide where they want to take the hit for each property, on the balance sheet or the cash flow statement.
I personally believe most banks will be more motivated to take the cash on the residential side of the business going forward since they have taken much of the hit on the balance sheet for this business already, prior to the discontinuance of mark to market. And I think they will use that cash to maintain their regulatory capital while writing down lots of commercial loans.
In my view this is why the number of foreclosure notices is way up this year versus last in RB, and my hunch is that is true throughout 30A. The banks are coming to collect their cash. Personally I think it is in everyone's best interest that they price below replacement cost to move their inventory. Transaction volumes recover faster, inventory clears faster, and the bottom in comps is of shorter duration.
Plus the banks have cash to cushion the commerical loan book degradation and pay off TARP faster. But, of course, none of them are calling me for advice...