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Tuesday, September 21, 2010

The Shadow Inventory

Recently a reader asked me about the creepy shadow inventory that may be lurking in our local Cape Haze peninsula real estate market. They were waiting for property values to plummet again before making their purchase. I found that our property values have started to stabilize. Here's the logical explanation.

WASHINGTON – Sept. 20, 2010 – For the last year, the real estate industry has been talking about shadow inventory and the coming flood of distressed properties. Where are they?

Here’s what’s happening, according to a recent paper by Alan Mallach, a senior fellow the Brookings Institution:

• Some delinquencies have been resolved through loan modifications or people working out the problems on their own.

• Banks are getting better at managing short sales.

• Investors are aggressively buying up properties, sometimes in bulk, directly from the banks or at courthouse auctions so they don’t hit the market.

The likeliest outcome, Mallach predicts, is a steady flow of foreclosures over a long timeframe that will prevent another crash in home prices – but it will probably lead to low or no appreciation in home prices for a while.

Source: The Wall Street Journal, Nick Timiaros (09/16/2010)

Gasparilla Island real estate is different. On Boca Grande, the average sale in 2009 was $1.37 million and in 2010 so far is $1.53 million. I am not suggesting that property values are going up just yet, but that more high end properties are selling and thus raising the averages. More properties are selling overall, so I do predict values to rise in the near future here.

Kelly Reark, ABR, TRC, e-PRO
Licensed REALTOR in the State of Florida
Gasparilla Properties, Inc., Boca Grande

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