Is Housing Recovering or are More Distressed Sales on the Way?


This Forbes article does a great job of giving the real estate world a bit of a reality check.  The recent surge of Buyer Demand due to low housing prices and record low mortgage interest rates has caused home prices to surge across the United States. As Forbes illustrates, a new wave of shadow inventory is on the horizon now that lenders and asset management companies have ironed out their issues with foreclosing on properties more efficiently and in accordance with Federal and State legal standards. Many worry that these distressed properties will once again flood the market with distressed properties for sale at prices below market value once again. Since homes are valued and priced based upon the comparable sales method of valuation, these below market sales could once again cause home prices to decline.

However, real estate trends are historically hard to reverse.  Unlike the ever fickle stock market, once real estate momentum sets its course it's usually quite some time before it jumps tracks and changes direction.  So the question for the remainder of 2012 and into early 2013 still remains:  Will current buyer demand remain strong enough to purchase up the oncoming wave of distressed property supply that is expected to be placed up for sale in the near future?