“Shadow inventory” is beginning to have an effect on home prices. According to the Miami Herald, the prices of existing South Florida homes increased as the number of sales dropped in October. This drop in home sales comes amidst a slowdown in foreclosures by banks due to alleged irregularities in procedures.
It is believed that this trend is temporary now that foreclosures have resumed. Nevertheless, the slowdown could lead to an increase in the amount of homes that are “shadow inventory” and slow down a long-term recovery. The term “shadow inventory” describes homes which have already been repossessed by banks, but have yet to be listed for sale.
In Miami-Dade County, single family home sales were down 6.2 percent from September and down 4 percent from last year. The only year-over-year increase occurred in Miami-Dade’s condo market. Condo sales were up 17 percent from last year, but down 9.1 percent for the month.
In Miami-Dade County, the median price for a single family home sold in October was $199,100. This represents a 5.9 percent increase from September. For October condo sales prices rose 8.4 percent to $107,000.
The increase in prices can be attributed to the fact that banks have dramatically reduced the amount of properties they list for sale with an agent. As such, since less lower-priced homes are being sold, median prices increased.
The long-term effects of the foreclosure suspensions are not clear. Some experts envision a years-long waiting period before the local housing market returns to a normal level. Others believe the effects will be minimal.
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