Bidders Passing On Foreclosure Sales - Leaving Homes On Lenders Laps

In California, The Mercury News reports on a story that is becoming more and more common throughout the country - a segment of residential real estate that is a "growing category in the housing market: homes that fail to sell at foreclosure auctions and are repossessed by lenders." According to the article:

• "In May, $2.8 billion worth of California real estate went up for sale in foreclosure auctions, according to ForeclosureRadar.com, a Discovery Bay company that sells foreclosure information to subscribers. Of that amount, about $2.6 billion worth failed to find buyers, and so became bank-owned. The figures represent the total value of the outstanding loans that went up for auction."

Based on this, I raise the following question:

• Can we expect our neighborhoods to be flooded with billions of dollars of vacant (and possibly boarded up) homes, possibly with untended pools (mosquitos?) and uncut high grass and weeds (rats, snakes, etc.?), attracting an occasional vandal or two (to swipe appliances, copper tubing, and other assorted items of value from the home), thereby helping drive neighboring property values that much further into the ground than they already are?

For the story, see Once rare in valley, lender-owned homes on the rise.

In a related story, NBC Nightly News had a report last night on California and how hard hit it has been with foreclosures. Among other things, reporter George Lewis speaks with one concerned homeowner whose home is surrounded by empty, untended foreclosed homes. For more, watch the NBC Nightly News report, California Hit Hard With Foreclosures.

See also, The Newest Homeowners: Big Banks (The Motley Fool - reported on MSNBC).