Real estate experts in Nashville say that the local market is being held back is being by the so-called ‘shadow inventory’ of unoccupied bank-owned homes that have yet to go on the market.
The latest report from the Greater Nashville Association of Realtors shows that home sales in the area jumped by 26% last July, while median prices are also on the rise, standing at $181,250 - up by $1,350 from July 2011.
What with prices on the rise, and available properties been snapped up at an ever faster rate, Nashville realtors are now worried that inventory could become a problem in the city. According to Kendra Cooke, president of the GNAR, available inventory in the area has dropped by 16% in the last 12 months, leading to just seven months overall supply. More worryingly, in the single-family home category, total supply is estimated at just five months.
Nashville is no different from the rest of the country in that respect - real estate professionals are worried about the lack of available inventory in the lower price range.
Moe Veissei, president of the National Association of Realtors, stressed that what's needed now is additional inventory in the lower price bracket.
Of course, there are thousands of lower price bracket homes just waiting to be sold, but many of them are sitting there doing nothing – so-called bank owned homes that have been foreclosed upon but up until now, haven't been listed for sale.
“We're hopeful that banks will soon be releasing more of the foreclosure inventory,” said Veissei. “It’s what markets need right now.”
Realtors are worried that the markets tentative recovery could be harmed by the lack of housing supply in the lower price range. This is a particular problem in Nashville, where inventory has shrunk by 14.6% since July 2011. The good news is that banks are likely to release foreclosed homes back onto the market sooner rather than later. Nashville, with its burgeoning market, is likely to be a tempting proposition for banks looking to shift foreclosed homes, especially considering it is performing much better than many other markets in the country.
While many foreclosed homes cannot be listed yet - either because their owners are still living in them, or they are too badly damaged to be listed for sale - there are many that are ready to go. The problem up until now has been that market conditions simply haven't been favorable, and banks were unwilling to take too much of a loss on the sale of these properties.
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