Current historically low interest rates have contributed to a significant improvement in the housing market over the past few months. It was good news for housing when
data for pending home sales showed an unexpected 5.9% jump in May, 2012 vs. April, 2012. Many have taken this as a signal that interest rates are nearing their bottom, and will likely begin to increase over the next several months. In addition, while some area markets are stabilizing, the S&P/Case-Shiller Index of Property Values showed that the decline in home prices during the month of April, 2012 was at its lowest since November, 2010, indicating that although home prices are starting to stabilize and are soon expected to increase, they are still down even as the housing market sees some improvement.
“Investors are quickly swallowing new foreclosure supply, limiting shadow inventory and creating a floor for home prices,” Goldman Sachs analysts Joshua Pollard and Anto Savarirajan wrote in a note to clients. “We expect any further decline in inventory to serve as a platform for price appreciation, further aiding sales.”
"Shadow Inventory" refers to real estate properties that are either in foreclosure and have not yet been sold or homes that owners are delaying putting on the market until prices improve. Shadow inventory can create uncertainty about the best time to sell (for owners) and when a local market can expect full recovery. Also, shadow inventory typically causes reported data on housing inventory to understate the actual number of properties in the market. The fact that Shadow Inventory is being limited in combination with the foreclosure supply being reduced is an indication that the supply of real estate properties is truly declining.
This would certainly suggest that there will probably never be a better time to either buy another home or refinance your existing home. If you are considering going forward with either anytime in the near future, you should contact your mortgage loan officer to help assess your current situation and determine which options are available to you.