Foreclosure and Housing Price Trends

The Graph above shows the actual raw numbers of what’s going on for foreclosures and home prices nationally.

Shadow inventory refers to the inventory of homes in default that are not yet on the bank  for sale inventory.  Some of this shadow inventory has already gone through the foreclosure process but is not on the market for various reasons.  Depending on who you ask you might get a wide range of what’s going to happen with this inventory in 2010.  Some believe there will be a flood of defaulted houses coming on the market in 2010.   Others claim increased mortgage modifications,  short sales and other methods have already softened the blow.

There is no debate over the large number of defaults that are carrying over to 2010.  What the debate is all about is just how much affect this inventory will have on the housing market.   As the graph above suggests, the actual numbers say that foreclosures peaked in July.   Since that time the number of foreclosures have been slowly declining.   Related to that home prices have been pretty much flat for the last several months.

Personally, I’m skeptical that there will be any flood of foreclosures.  There is enough anecdotal evidence that Short sales and loan modifications are reducing these shadow numbers.  There still be lots of distressed property for sale.  I just don’t see any sudden flood on the horizon.

Technorati Tags: Defaults, Foreclosures, Shadow Inventory