Shadow inventory less of a threat
With all the news about the housing slowdown there are still signs of market improvement. Although the headlines are largely discouraging with their persistent message of slowdowns, there are other areas where slowdowns give us hope.
For one, foreclosures have slowed. A headline last week showed not only sharp declines in foreclosure filings, but in many states actual foreclosures fell by more than 30 percent. Nationally, foreclosures have fallen year over year for eight months.
In Idaho too, our foreclosures and filings are down 30 percent from the same time last year. Ada and Canyon counties still lead all other Idaho counties in foreclosures according to Realty Trac, a national firm who tracks such data. Kootenai County foreclosures fell by 11 percent according to that source.
This is certainly good news for the future of real estate, but what about the homes that have already foreclosed but have yet to hit the market. Rumors abound about a catastrophic number of houses that banks have not yet released into the market. This inventory is often referred to as, "Shadow Inventory" or inventory lurking in the shadows, waiting for an opportune time to join the homes for sale that are prevalent in markets across the U.S.
According to an article published last week by RISMedia, this inventory is shrinking too. Nationally, according to the article, the inventory fell by more than 200,000 homes. This decline is consistent with the slowdown in payment delinquencies of more than 90 days. The 90-day period is when many lenders enter Notice of Default, the first step in implementing a foreclosure proceeding.
Although many people may be "under water" as they continue to pay for houses that are worth less than they owe, they do continue to make their payments. Why? Because everyone needs a place to live.
Perhaps there is still some of that old style American "can do" attitude that causes people to stay with their commitments, no matter how bad the economy is or how acceptable it has become to walk away from obligations. Many of us still believe, a deal is a deal and will continue to make our house payments. After all, the majority of us never intended to "flip" our houses for profit.
Most Americans just want a comfortable place to raise there families and store their belongings. Under water or not, your home is still your home and many of us are not willing to give that up because of a downturn in the market.
Historically, real estate has always rebounded. We have no doubt that the current recession will pass and that real estate will recover again, delivering a return on our investment. We are not likely to see appreciation soon, but unless you plan on leaving your home right away you should be OK in the long run.
As we have reported here before, locally we have less inventory actively in the market than we had at this time last year. If we continue to see fewer foreclosures and diminishing shadow inventory, we can anticipate some recovery in the market.
Trust an expert... call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.
Kim Cooper is a real estate broker and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664.