One of the biggest challenges to the housing industry throughout the rest of the year will be the increase in discounted properties coming unto the market. There is a glut of foreclosures that have been delayed by the court systems in many states while paperwork was corrected. The banks are rectifying their paperwork and processes. Now, more and more states are clearing the way for the banks to resume repossessing these properties. The real estate market won’t recover until we work our way through this discounted inventory.
The great news is that as these properties exit the bottom of the inventory funnel, there are fewer homes entering the top of the funnel. The best indicator of future foreclosures is the number of households that fall 90 days delinquent on their mortgage payments. This number is falling dramatically. As the S&P Shadow Inventory Report states:
