There are several reasons for the shortage of inventory homes available right now in Houston. Some have to do with lack of builder inventory and if you listen to our weekly radio show you know all about that. Another is due to the negative impact of foreclosed properties.
Everyone knows that banks discount foreclosures so they will sell fast. So that means all similar homes in the area lose some of their value because they are being compared to that foreclosure that wasn’t sold at market value. It causes appraisal values to go down. It creates a downwards trend for real estate prices, which we have seen in the last few years. This has caused hundreds of thousands of homes nationwide to lose 30% or more in value.
If a seller cannot receive enough money from the sale of the home to cover the home’s loan and other fees associated with selling, they usually decide not to sell unless they are forced to due to extenuating circumstances. So there may be many homes out there that have sellers who want to sell, but cannot right now because they are still underwater. As prices continue to go up due to demand and the stabilization of the economy, these sellers will eventually be able to sell. But right now, it is causing a lack of resale inventory in our market.