Due to the cessation of foreclosures following the robo-signing scandals of 2010, the backlog or “shadow inventory” of bank owned properties has grown significantly. Locally, actual foreclosure sales are down over last year by 50%. However, lis pendens (foreclosure) filings are now up 100%.
This would tend to indicate that we are in a lull, the period in which the lion’s share of the foreclosures have been absorbed by the market and when the banks are resuming foreclosure action. With the banks more aggressively pursuing delinquent homeowners, many expect a surge this year in bank owned inventory. Another consequence will likely be more short sales as more delinquent sellers begin looking for ways to avoid foreclosure.
The impact that this may have on Emerald Coast real estate values will depend much upon demand. Demand has been steadily increasing over the past two years. Should this trend continue, the negative impact of additional distressed inventory on the market may be negligible.