A recent article from RIS media reports that an unexpected burst in real estate activity around the country is a signal that the long expected "bottom of the market" has come and gone. The harbinger of better times comes in the form of fantastic market figures from those U.S. regions with the highest rates of mortgage defaults and foreclosures, where, for the longest time, an overabundance of devalued housing stock stagnated on the market while anxious buyers sat on the sidelines waiting for the market to hit bottom.
Many commentators believe that improvements in those regions where property values and real estate transactions have decreased the most will be the catalyst for the recovery of the U.S. real estate market as a whole.
Property is selling, and although these sales are being driven by fire-sale prices, the important fact is that the market is working again in those parts of the country where it had come to a distressing halt. We can't expect to see property values rise again if nothing ever sells.
Mortgage defaults have transformed lending institutions into unwilling owners of houses with very uncertain prospects of future value. Banks, not being in the business of owning property, sought to get rid of their real estate as quickly as possible, even at bargain basement prices. Now, there's talk that stabilization in these worst of markets will motivate banks to ease off on dumping property, instead shifting their priorities to minimizing losses by pricing foreclosed property more aggressively, moderating how much they bring on market at any given time and being more amenable to pre-foreclosure short sales. This chain of events makes me cautiously optimistic that property values in the hardest hit markets will cease to plummet, and that this will have a positive effect on the national real estate market, and eventually our economy as a whole.
In fact, April figures for pending home sales nationwide show an increase of 6.7%, representing the biggest monthly gain in more than seven years according to figures from the National Association of Realtors.