Even as the housing market continues its recovery following the Great Recession, inventory still remains low. But, according to RealtyTrac vice president Daren Blomquist, foreclosures that hit the market in 2013 could serve as a notable boost to the real estate industry.
Foreclosures, which can negatively affect the housing market by decreasing the value of homes, may actually be a positive thing in today's industry when the number of properties for sale is in need of improvement, Blomquist told DS News.
While some experts are concerned that banks are purposefully holding onto homes at the moment, Blomquist disagrees, saying that they are simply being cautious. The process of releasing these properties may be slow, but it's unlikely that they will bring down overall prices when they become available. This helps dispel the fear that shadow inventory will negatively impact the market.
"This so called shadow inventory never hit full force, so now I think we're at a point where the pendulum has swung completely the other way and the housing market needs more inventory, so 2013 would be a serendipitous time for banks to release that inventory," said Blomquist.
The number of foreclosures in 2013 is expected to vary across the country since there is new legislation in place in states including California, Nevada, Washington and Oregon that is slowing down activity.
It will be interesting to see if Blomquist is correct and foreclosures help increase housing inventory without causing home values to drop. It's also important to remember that springtime is approaching and, since this is usually when people are more likely to buy and sell homes, there may be a boost in activity in the coming months. With this in mind, lenders should invest in loan management software to ensure that borrowers can stay on top of their monthly payments and remain financially responsible.