More good news this week from America’s N.A.R. (National Association of Realtors) - housing sales are up for a third straight month, and prices remain low.
This week’s news adds more fuel to the fires of the positive housing posse - building contractor’s confidence is up after an unexpectedly good start to homes being sold june. There is a fascinating undercurrent to the market now many may not have considered. In an unusual move, many banks which have taken back homes which have been repossessed in the U.S., are being held onto the banks who would normally place the property up for sale as soon as possible.
Home Price Reductions
These properties are called REO properties (Real Estate Owned) are being held off the market by the banks in order to avoid excessive flooding of the market with underpriced homes - placing further downward pressure on the market and house prices. Putting all REO homes onto the market would force the banks and other corporations to accept even further price reductions to get the properties off their books.
Just how many properties are their that are being held back? Some estimates gauge the figure at around 700,000.
Foreclosed Properties
Investors are currently returning to the market and buying up most foreclosed properties - these are in turn being rented out and driving down rental values, as would-be tennants have more and more choices in the market. This is in turn having a negative affect on the building contractors who are constructing entry-level homes for young buyers.
Current predictions are that there will be 6.5 million foreclosures in the U.S over the next 3 years.
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