The fact that it takes banks longer time to put repossessed homes back in the market is a sign that there are even more foreclosed homes to sell than what current statistics show.
A lot of foreclosed properties are already a part of the housing inventory of banks, but are not yet listed for sale. These properties are called "ghost inventories". Such a situation implies lower housing prices and eventually leads to even more foreclosures.
According to RealtyTrac, only 1/3 of the foreclosure database of several states is listed for sale.
There are several reasons why a lot of foreclosures are not yet listed for sale. One thing is that lenders are overwhelmed with the number of distressed properties that come their way and they cannot get them back on sale faster. Probably, the main problem is system overload. Banks are not yet used to handling great number of foreclosures.
Lenders are doing their best to act on this situation as quick as possible so to cut losses due to expensive maintenance of these homes.
Another reason for fewer market listings of foreclosed properties is that banks hold back home listings to certain areas where they already have a lot of homes for sale so to avoid flooding the housing market. Some bank-owned homes are not in the listings because lenders try selling them in bulk or auction sales to investors and individuals.
Also, the foreclosure process often takes so long because of the red tape and other delays caused by the banks. And because of this, the houses deteriorate and putting them back into sellable condition quite takes time too.
With the rising ghost inventory, more foreclosures are to flood the market and home prices to go down, showing that the situation of the housing market cannot get any better this 2009.
John Cutts has been educated in the finer points of the foreclosures market over 5 years. Read about the following article Ghost Inventory: Sign of Worse Foreclosure Flood by John Cutts on EForeclosureMagazine.com.
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