Realty Trac, a compnay that monitors default notices, scheduled auctions and bank repossessions (REO) in counties across the U.S., stated that filings were down 17% from a year ago. This marks the third straight month of under 300,000 filings following a period of 20 months with higher numbers. Though they had originally predicted that foreclosures would be on the rise, procedural reviews have slowed the process.
In Maricopa Arizona, the inventory of available homes has been on the decline since mid September in spite of the fact that there are still a large number of distressed properties "in the works". A review of the 30,60,90 days delinquent list tells me that many homeowners will eventually short sell their home or lose it to foreclosure. In addition, a large number of homes that have already been foreclosed on have not yet been placed on the market. What exactly will happen with this "shadow" inventory remains to be seen.
We are currently experiencing our annaul surge in buying activity, mostly driven by seasonal buyers (snowbirds) and unless the lenders begin to release this backlog of inventory competition for homes will be fierce. Though this is keeping values steady, I can't help but wonder what the future will bring.
Obviously, if the lenders were to release all of the backlog at one time, the housing market in Maricopa Arizona and other areas would quickly adjust and values would most likely decrease up to 10%, the dreaded double dip. On the other hand, if they decide to release them slowly as to not affect the values as drastically, it will prolong the housing slump as a "normal" market cannot resume until this inventory is depleted. It's kind of a Catch 22, damned if you do and damned if you don't.
I am mostly concerned that if some sort of release does not occur in the next month or so, we will lose the opportunity to take advantage of the seasonal buying activity which begins to slow down in May. Either way, it will be difficult to shed this excess inventory until next year's seaonal cycle and most likley it will take until the 2013 cycle to finally deplete the inventory of the majority of the distressed properties.