Is This A Reemergence Of The Shadow Inventory In Real Estate

Long-time readers of the Tallahassee real estate blog were introduced to the concept of the shadow inventory of homes more than five years ago.

A reader had asked me to explain what it was and whether or not Tallahassee was dealing with more than its fair share of homes that fit the description of “needing to be sold” yet not listed for sale in the Tallahassee MLS.

We explained that the real estate shadow inventory includes homeowners who are facing foreclosure, banks or lenders who have foreclosed on homes and now own them, homeowners waiting for the market to improve, and people who have failed to sell their home recently or in the past.

So five years later, with the Tallahassee real estate market recording a slow, continuous rise in the number of homes selling every day, where do you think the shadow inventory of homes stands?

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Will Short Sales Return In 2015?

Weekly real estate report 233x300 Will Short Sales Return In 2015?, Tallahassee Real EstateWhile the distressed home sales market continues to grow in Tallahassee, the make-up of these sales has changed quite a bit in just the past year.

Just two years ago, nearly one half of all distressed home sales were short sales, meaning that banks were working-out a solution with the property owners that allowed for the home to transfer without the mortgage being fully repayed.

But short sales are plunging, all the while distressed home sales are on the rise. Simply put, homeowners are not choosing short sale as the solution to their current housing problem.

Find out why short sales are plummeting and what it will take to reverse this direction next year in this week’s one-page special report.

What The Recent Foreclosure Report Means For Tallahassee Housing

With the end of another quarter of home sales in Tallahassee, we have just recently updated our reports on lis pendens filings and foreclosure sales.

The trend of foreclosure sales is soaring, an unsurprising result of the past lis pendens filings that have occurred.

But a recent trend reversal on lis pendens filings is a cause for concern regarding the near future of home sales and values in Tallahassee.

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An Update On Short Sales And Foreclosures In Tallahassee

We like to keep a close watch on the inventory of distressed properties for sale in Tallahassee. It serves as an overall bellwether for the state of the Tallahassee real estate market, knowing that we have a lot of short sales and foreclosures that still must clear before our market can return to “normal.”

Overall, we are starting to see a non-seasonal decline in the number of distressed properties that are entering the market. I suspect this is good news, though there is likely some pent-up supply of short sales with upside down homeowners waiting to see what happens with the Mortgage Forgiveness Debt Relief Act.

Rumor has it that this will be extended in October, retroactive to include all of 2014 and continuing through all of 2015. Regardless, the numbers are looking better right now.

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Is There A Conspiracy To Control Distressed Property?

It appears that the surge of distressed property that entered the market in August of last year will be replicated in 2014, as the short-term trend of short sale and foreclosure listings is moving higher.

A conspiracy theorist might conclude that the large lenders holding the most distressed property inventory have withheld the bulk of their REO assets during the peak summer months in order to help real estate values recover, but I suspect they aren’t that organized.

Take a look at the again-changing landscape for homebuyers and sellers alike, as more than 1 in every 5 new listings in the Tallahassee MLS is being marketed as “distressed.”

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How Fewer Short Sale Listings Might Be Contributing To Slowing Market

Weekly Real Estate Report 231x300 How Fewer Short Sale Listings Might Be Contributing To Slowing Market, Tallahassee Real EstateThere were nearly 600 closed distressed home sales in Tallahassee through July, the most on record through July of any year for which I have records (24 years).

Of the 598 closed distressed sales, 77 were recorded as short sales, meaning  1 in every 8 distressed sales is a short sale. Considering that the ratio has been above 1 in every 3 distressed sales over the previous four years, we can definitely conclude that the short sale is no longer the solution of choice for troubled homeowners.

Unfortunately, fewer sellers choosing to sell short is creating a different problem that we had not anticipated.

Read this week’s special report to find out about the “catch-22″ scenario that has occurred as the short sale option sees fewer sellers.

Which Tallahassee Subdivisions Should Expect The Most Foreclosures

In case you missed the announcement this weekend, we just released our foreclosure reports for the month of June.

During the process of compiling all of the lis pendens filings for the report, I felt it would be a good time to create a graph showing the Tallahassee subdivisions where we should expect to find the most foreclosures in the coming year.

While many of the “usual suspects” are listed, there were a few surprises as well.

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Distressed Home Sales Remain Steady

There is an interesting conflict developing for distressed home sales in Tallahassee. We are seeing roughly 30% of the homes selling each month come from short sales, foreclosures and bank owned properties, yet there are very few distressed listings entering the market.

That means buyers are flocking to a smaller pool of these below market properties, and we will soon see some changes occurring in what is closing.

Perhaps the big dip in buyer activity this summer can be blamed on the fewer offerings from short sale sellers.

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Is It Too Late To Short Sale Your Home?

There have been 57 short sale closings in Tallahassee through May 2014, down 59% from the 140 closed through May in 2013.

Before you start getting excited thinking that were are seeing an end to the plethora of distressed property sales in Tallahassee, you should also know that there have been 315 “other” types of distressed sales thus far in 2014, up 40% from the 225 closed through this time last year.

So we have to wonder, are we right in the middle of the real estate recovery, or have we begun moving towards the end game?

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How To Buy A Home In Pre-Foreclosure

Many of the large real estate sites are now offering information for each home in pre-foreclosure, and this confuses a lot of homebuyers.

In case you haven’t heard the term before, it merely means all the homes that have been served foreclosure papers (lis pendens) but the bank has not yet taken back the home. Of course, many of these are already being actively marketed as short sales, but there are those properties where the owner does not want to sell or has not decided to market the home for some reason.

It is these elusive pre-foreclosure properties that are frustrating buyers looking for a great deal in the Tallahassee real estate market. So how does one go about seeing them?

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