The last bastion of economic recession in the housing market, the foreclosure crisis, may finally be showing signs of weakness. When looking at the relative balance of rent supply and rent demand, given that the shadow inventory of REOs have declined, it appears that the reduction in homeownership is not necessarily a bad thing, according to data in a recent dsnews.com article.
Specifically, rental vacancy rates have fallen to 8.6% which is the lowest since Q2 of 2006. A number of prospective homeowners have opted to rent instead of investing in a foreclosed real estate property, which has contributed to declining vacancy rates. For those prospective homeowners who have opted to go the route of distressed properties, they have contributed to the reduction in the shadow inventory, little by little.
Hence, the last bastion of economic recession in the housing market, the foreclosure crisis, may indeed finally be showing signs of weakness. Therefore, this may be the first real sign of change in the economy.
Michael Hobbs, SRA PahRoo Appraisal & Consultancy
Twitter: @PahRoo
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