The prices of homes that have gone through the foreclosure process rose sharply during the spring, but sales of foreclosed homes, thanks to the rising costs, took a steep dive, according to a report from Business Insider.
Sources say that banks are increasingly likely to sit on homes rather than place them on the open market, which has helped inflate the prices of the few available homes.
And an increase in homeowners, coupled with the diminished supply of homes, has turned the current home inventory into a seller?s market in many areas of the country.
Foreclosed Homes Remain an Economic Albatross
After the recession struck in 2008, tens of thousands of homeowners across the United States found themselves unable to make their mortgage payments.
And the problem still plagues Americans today. At last count, roughly 1.47 million homes are in some stage of the foreclosure process, according to sources.
Many of these homeowners will eventually become victims of foreclosure, although some may be able to delay or even prevent foreclosure by filing for bankruptcy.
The homes that aren?t protected in bankruptcy often fall into the hands of lenders, and those lenders now have a grasp on a significant portion of the U.S. housing market, which seems to be experiencing some sort of recovery.
According to Business Insider, the combination of a shrinking housing inventory and increased demand for new homes during the traditionally active spring season helped boost housing prices from April to June.
In fact, the cost of bank-owned homes and other residences stuck in the foreclosure process saw its largest annual increase since 2006, before the recession struck.
Prices of Foreclosed Homes Rise But Inventory Shrinks
Sources indicate that, of the 620,751 foreclosed homes that are held by various lending institutions, only about 15 percent are actually for a sale, which is a remarkably small portion of the total inventory.
And thanks to the difficulty of selling these homes through the traditional foreclosure process, many banks have opted to unload their excess properties through short sales.
In a short sale, the lender agrees to accept less money than the amount that the original homeowner had left to pay on the mortgage. In exchange, the lender gets to sell the property quickly, and avoid much of the hassle of a formal foreclosure.
In the first half of 2012, the number of short sales on properties that had not yet entered foreclosure rose 18 percent, which shows that both lenders and buyers are finding short sales to be a more attractive alternative.
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