Finally, some bright housing news. Prices nationally rose 2.5 percent this past June, according to CoreLogic Inc., a Santa Ana, Calif., housing research firm.
Moreover, prices at the end of the second quarter jumped from the previous quarter by percent increases not seen since the housing boom years.
Lots of experts have declared we’ve seen the bottom.
One reason the worst may be behind us is because the so-called “shadow inventory” has been in decline.
CoreLogic defines the shadow inventory as the homes that are about to go into foreclosure, are in the foreclosure process or have been taken back by the lender but aren’t yet on the market for sale.
Using that definition, CoreLogic reports that nationwide, the shadow inventory consists of 1.5 million homes, significantly less than 2.1 million during the darkest period in 2010.
The outlook is brighter in states where foreclosures aren’t stalled in lengthy court proceedings, the so-called “judicial foreclosure” states, says Michael Orr, director of the Center for Real Estate Theory and Practice at Arizona State University, Tempe, Ariz. In Arizona, for instance, shadow inventory is not a threat to the upward price momentum. “This is primarily because we are very quick and efficient at foreclosures and short sales and are working through delinquencies at a faster rate than other states,” Orr explains.
“The problems are most severe in those states where delinquency rates are still rising: Arkansas, Hawaii, Washington, Oklahoma, New Mexico, Mississippi, and almost all states in the Northeast. In Florida, Illinois and Nevada, delinquencies are still very high, but at least they are now falling.”
A more encompassing definition of shadow inventory includes homes whose owners want to sell but are waiting for better price levels, adds Rick Borges, president elect of The Appraisal Institute, the global trade group for real estate appraisers.
The danger is that when these sellers see prices start to climb, many homes will suddenly come onto the market, which could reverse price increases, Borges says.
— Marilyn Kennedy Melia
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