The housing market may not correct itself until people rejoin it. But people might not rejoin the housing market until corrects itself. Got it?
That’s essentially one of the reasons why housing markets around the country have been so slow to recover. Many homeowners and banks have decided to simply wait the recession out and keep their inventories of unsold houses off the market until prices improve.
In other words, if a homeowner thinks the market will improve, say, next summer, and they can afford to wait another six months to sell, they’re likely to do just that.
So with millions of such homes just sort of waiting around for people to start buying, the housing slump just keeps dragging on and on. As soon as there are signs of recovery, thousands of withheld homes get put back on the market, pushing prices down again.
Furthermore, the slow foreclosure process—plus lagging unemployment that cripples home-buying and fuels fears of future foreclosures—would alone stunt the recovery, even without all the other factors.
These sorts of rational market irrationalities happen all the time during economic crises, when panic, uncertainty, and economic chaos keep markets from sorting themselves out more methodically.
But here’s some good news for Dallas-area homeowners. According to the Dallas Morning News:
The Dallas-Fort Worth area has one of the lowest “shadow” inventories of unsold homes among major U.S. cities, according to a new study. But the addition of these houses to the market still significantly adds to the supply.
Shadow inventory homes are properties that have been foreclosed on or are in the process of foreclosure but are not currently listed for sale. Housing analysts say this pending supply will keep prices depressed in many cities.
Nationwide, there were more than 2 million shadow inventory homes in August—an eight-month supply—according to researchers at CoreLogic Inc. In the Dallas area, the shadow inventory was 6.7 months, the California-based mortgage and finance analysts said in a report released Monday.
In other words, there will be fewer recovery “false starts” in a place like Dallas.
Until then, it’s still a prime buyer’s market for those who are in the position to do so. Contact one of our Dallas home loan experts if it’s time to buy.




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