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A decline in the number of homes for sale would seem to be a positive sign for the troubled housing market, but the traditional rules don't apply these days.
Although housing inventory dropped in August to the lowest point so far this year -- and down 19 percent from a year ago according to Realtor.com -- real estate experts attribute it in part to a lack of what they call "price discovery." Buyers don't know if they're paying a good price for a home and sellers are uncertain about where to set the home's price, so both are staying on the sidelines. Another factor in the decrease in inventory is the number of pending foreclosures, particularly in hard-hit markets like Florida.
In August, 2.27 million homes nationwide were listed for sale, down 1.9 percent from July. Some parts of the country saw bigger declines in inventory, particularly in the South. Florida's major metropolitan areas all had fewer for-sale listings, with Miami (down 48 percent) and Orlando (down 46 percent) leading the way. Phoenix, Ariz., had a decline of 45 percent.
Out of 146 housing markets, inventory increased in 15 of them since July and in only three of them since last year: Hartford, Conn.; Denver, Colo.; and El Paso, Texas.
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If a homeowner were in default of their mortgage, why wouldn't the bank refinance the loan for the marketable value? Wouldn't this benefit everyone involved? The owner's can stay in there home, the banks save money on attorney’s fee's, taxes, insurance, HOA fee's etc. If a home goes through the foreclosure process and gets listed as an REO property for sale the listing price is going to be market value which in most cases is 1/3 of the original mortgage. The bank is going to loose money anyway why not stop the bleeding at the source?