The foreclosure slow down initiated by banks because of fraudulent practices was supposed to lead to a sharp drop in bank-owned properties and an increase in short sales, at least in the short term. Some felt that a reduced inventory of Tampa homes for sale would result in higher prices.
In the Tampa Bay real estate market, over 23% of home sales are foreclosures. That’s right…almost ¼ of all sales in our market are bank owned. That’s a big number considering they are a very small portion of the available inventory. Of the nearly 29,000 homes for sale in the Tampa Bay area, slightly over 2,100 are REO properties. Remove those from the available inventory, and the stalled real estate market would take another hit.
The experts said that as the inventory of bank-owned homes dwindled, there would be more competition for non-distressed properties which in turn would cause prices to increase. That might have been true in some areas, but not in Florida which ranked #1 in foreclosures and has the 4th highest unemployment rate in the country.
Most home buyers in the Tampa Bay area are purchasing properties because they are a GOOD DEAL and are not buying out of necessity. To assume buyers would pay more for a home here if the lower priced properties temporarily disappear was naive.
Buyers are nervous about making a purchase in the current economic environment. They know that while there are currently less foreclosures to choose from, there are going to be more down the road. They are likely to wait until those properties begin to hit the market or take their chances on a short sale.