Foreclosed properties 'must exit the US market before it can recover'

A recovery in US residential real estate markets will not be felt until the large number of foreclosed properties on the books of the country's banks have been dealt with.

This is the opinion of Mark Dotzour, chief economist at the real estate center at Texas A&M University, who told attendees at the Virginia Commonwealth University's Real Estate Trends Conference that this is holding the sector back.

The Richmond Times Dispatch reported on his keynote speech at the event, quoting him as saying that the 4.5 million to six million foreclosed homes in the US need to be sold on to private investors "so we can restart the game over".

He added that measures to tackle the issue with loan modifications will only make the process take even longer.

Last month, the National Association of Realtors called for fewer restrictions on lending to credity-worthy buyers in a bid to reduce the number of foreclosed properties in the country.

The organisation stressed that addressing this problem will help "stabilise and revitalise the housing market and economy".

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