Only the Shadow Knows?? ? Central Oregon Real Estate News

Shadow Inventory.? Most of us have heard the term, and, in fact, I?ve mentioned it more than once in this blog. It is defined as that housing inventory that has been withheld by banks while they made sure that they had clear right to sell the property in foreclosure.?So?are we going to see this ghostly inventory dumped into the marketplace or not?? And what?s this we are hearing about the return of a Seller?s Market here in Central Oregon?? Great questions?

First ? there clearly is a return to a seller?s market. The inventory of homes has decreased from nearly 25 months of inventory 2 years ago to 2.5 MONTHS of inventory today. WOW?.you say! Happy Days Are Here Again!? Well?.sort of?kind of.? But there?s a great disparity in how fast homes selling under $400K are flying off the shelves and the still-stagnant market for high-priced homes.? We ARE seeing more activity in ALL price ranges, but buyers in the upper price brackets are still very, very wary. They are deathly afraid they will overpay and this causes them to continue sitting on the fence.

We are seeing more all-cash buyers than ever before. These are mostly people who have been able to finally unload their property somewhere else and are moving to Central Oregon. The last two listings we sold for cash were BARGAINS for the buyers. And both buyers felt like they STILL might be paying a bit too much.

So what about this Shadow Inventory?? Is it real? Some mythical scare tactic?? Well?here?s an excerpt from an article that appeared April 2nd in the Daily Real Estate News:

Next Foreclosure Wave Coming: Reason for Alarm?

Daily Real Estate News |????? Monday, April 02, 2012

Economists have been warning that a flood of foreclosures will soon be hitting the real estate market, likely this summer. Increases in foreclosures traditionally pull down nearby home prices. So should home owners be worried?As of now, housing reports continue to show month-over-month drops in foreclosures. CoreLogic released a report late last week that showed completed foreclosures fell from 71,000 in January to 65,000 in February.

But as more banks look to clear a backlog of defaulting home loans from their books, economists say the public should expect a turn with foreclosures and the numbers are expected to soar in the coming months. Mark Fleming, CoreLogic?s chief economist, expects the wave to hit this summer.

However, Fleming doesn?t view the increase as a bad thing for the overall housing market. ?I would like to see the pace increase, because that means we?ll be able to work off the inventory faster,? Fleming told AOL Real Estate. He says that recent improvements in the real estate market and economy may mitigate any traditional downward pressure seen on overall home prices by foreclosures.

In fact, despite an increase, Fleming still expects home prices to rise in some markets.

RealtyTrac has predicted that completed foreclosures will jump 25 percent this year, reaching 1 million.

?All of this will result in more foreclosure pain in the short term as some of the foreclosures that should have happened last year instead happen this year,? Daren Blomquist, vice president of RealtyTrac, said in a public statement in February.

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So?what do I think??? I think we ARE going to see another round of foreclosures hit the local market and, in the short-term, this is going to keep pressure on home prices ? especially in the upper price bracket. It is going to take very REALISTIC pricing on the part of home sellers if they truly want to move-out and move-on. Your guess is as good as mine relative to how much Shadow Inventory will be dumped into this market. But I believe it will happen and it will prolong our agony for a bit.? And after that?? Back to a more ?normal? housing market where we will see prices at levels we saw in 2004.? Back soon?

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