Shadow Inventory Effects House Prices
If you're hoping this depressed housing market in Palm Beach County is going to pick up any time soon, so you won't be upside down on that house you own that you wish you could sell...well, I wouldn't hold my breath. Why? Because we still have a very high inventory of homes and there are a lot more to follow, in large part because the banks are not putting most of thier foreclosures back on the market. Those properties (the Shadow Inventory) will keep trickling into the housing market for the next few years. If the banks put all thier foreclosed homes on the market right now, there would be even more of a flood of homes and the prices would plummet.
Consider this: Standard and Poor's came out with numbers that show the housing shadow inventory in the US has been steadily rising since the Fall of 2009. Palm Beach County has approximately 26,800 distressed properties (in the foreclosure process and bank owned), and of those, almost 24,000 are not listed for sale. You can drive through many communities and see houses that have been vacant for months with no For Sale signs. Many experts say that only about 10% of distressed properties are on the market. Florida has the third largest percentage of distressed properties in the US and Palm Beach County has the highest of any Florida county. Some areas, such as Jupiter and Palm Beach Gardens, have seen a slight rebound in price this last quarter (6% and 8% respectively from the same quarter in 2009), but with so much inventory coming to market, the odds are that prices will stagnate or even decline some over the next year or two.
At least this is great news for buyers...prices have dropped over 50% since the highs of 2006 and mortgage rates are at or near all time lows. If you've been waiting, you've got the Perfect Storm for buying right now. Even though housing prices will probably continue to stay low, if interest rates start climbing, it will make a big difference in your mortgage payment. If the interest rates go up 2%, the monthly payment on a 30 year $300,000 mortgage goes up about $365. Timing is everything....