The Real Estate Market in August 2012

Real Estate Market

For the last few years the real estate market has been in a decline. But as of August 2012, the latest reports indicate that it has begun to take an upward swing. The decline was described as a “shadow inventory.” This basically meant that there were an excessive amount of rental vacancies which can have a negative impact on the real estate market especially where it concerns new home purchases. These market fluctuations directly influence companies such as Regency Property Appraisers who provide valuations for different types of properties both commercial and residential. With a vastly changing market come great changes in the value of homes and property appraising has to be changed to stay with the going market rates.

Freddie Mac was an organization which the Congress founded in 1970. The intent was to provide affordability, liquidity and stability to the US mortgage market. They provide financing for single family dwellings and about one out of every four borrowers use Freddie Mac to help purchase their homes. Freddie Mac works to provide mortgage capital to lenders who can then loan the money to qualifying persons who want to purchase a home. Freddie Mac has the “say so” in the real estate world and provide a measuring tool by which it can be assessed.

As of August 2012 the Freddie Mac House Price Index reported that the real estate market was showing a gain of around 4.8 percent since their last reports which were issued in March and June of 2012. This led their officials to state that the “shadow inventory” was not quite as foreboding as it was in the past. Other financial institutions such as the CoreLogic Home Price Index and the Federal Housing Finance Agency agreed.

Those companies who work within the real estate market have been encouraged to see this quarterly increase. In fact, it is the greatest increase in any quarter over the previous 8 years. The number of rental vacancies dropped to only 8.6% from June 2011 to June 2012; which was the lowest this rate had been since early in 2002. For-sale vacancies followed suit and dropped to only 2.1%; this was the lowest this rate had been since 2006. These are good indications that the for-rent market has balanced itself out. Even though there is still a shadow inventory in existence, it is slowly dissipating.

The biggest difference for the market in August 2012 is that there is no longer a huge excess of vacant property available on the market. Real estate professionals and appraisers like Abbe Edelman feel as though the market is finally in the initial stages of recovery. And professionals and economists are remaining positive that even though they expect to see the typical autumn-winter slump that it will not be enough to reduce these good reports from the second quarter of this year.

Freddie Mac’s offered its own definition of “shadow inventory” by stated that it is the amount of loans which are made for single family dwellings which are being foreclosed on or are overdue by at least 90 days. The Mortgage Bankers Association reports that there are still 3.6 million pieces of property left in the “shadows” which is down from about 5 million in 2009.These are lower than any of them have been in nearly 10 years. Without the excess rental properties thee is not as much competition in the market. This makes a new loan for a home much more attractive for both first time buyers and those who invest in real estate. Officials from Freddie Mac state that they know the “shadow inventory” is still in existence but that the housing market seems to be emerging from these “shadows.”