Anyone in the market looking to purchase a home will tell you that inventory is tight. Even in South Florida, which was one of the regions hit hardest by the crash of the housing market, homes are being gobbled up almost as fast as they are put on the market, either by people who plan to live in the home or by investors. Wall Street investors and foreign investors are able to come to the table with all-cash offers, making it difficult for the average buyer to compete. Part of the problem lies with banks which have continued to hold tight to their foreclosures, fearing that if they let loose it will flood the market resulting in a pricing plunge. Right now, prices are on the rise and are expected to continue to increase, even as interest rates tick upward. As a result, potential homebuyers are seeing their window of opportunity begin to close if they want to find a deal. That doesnt mean that lenders arent filing foreclosures, indeed, RealtyTrac Inc. recently reported that Florida continues to be at the epicenter of foreclosure activity, up 7 percent in July from a year ago, according to RealtyTrac. In fact, Florida remained the top state in the nation for foreclosure activity for the third consecutive month in July, with a filing rate thats three times the national average. However, many of these distressed homes have continued to remain vacant and are considered to be what is known as shadow inventory -- that is homes owned by banks or facing foreclosure, but not yet on the market. Why would banks hold on to distressed homes instead of getting them off their books? The answer is simple; they dont want to flood the market with foreclosures because if they do it could result in a glut of homes for sale. And, as we all know the more supply, the less demand and the less demand, the lower the price. When these homes finally come out of the shadows and hit the market also depends on how quickly the courts are able to finalize foreclosures. Earlier this year, Florida Gov. Rick Scott signed HB 97, aka the speedy foreclosure law which is designed to push the backlog of foreclosures through the pipeline at a faster rate. But some have called the law unconstitutional and have vowed to challenge it in court, which may stall the foreclosure process even further.
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