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Distressed inventories climb in Florida, Michigan

November 29, 2010 - A new report shows that those trying to pack their moving boxes and sell their homes in Florida will continue to encounter low prices because of an inflated supply of distressed properties.

CoreLogic reported that the states with the highest levels of distressed months supply are Florida, Michigan and California. Distressed properties are a particular problem in these states because buyers aren't moving into foreclosed homes at rates comparable to other states with high levels of distressed properties. For instance, Arizona and Nevada have large supplies of foreclosed homes, but high levels of distressed sales are keeping those markets moving. The same could not be said for Florida, Michigan or California.

"The weak demand for housing is significantly increasing the risk of further price declines in the housing market," said CoreLogic's chief economist, Mark Fleming. "This is being exacerbated by a significant and growing shadow inventory." That non-visible supply of homes - which have been repossessed by banks but have not yet hit the market - reached a supply of 2.1 million homes in August, said the report.

Distressed sales have been a particularly important stimulator of the Phoenix housing market, giving families there homes they can afford moving into. The Arizona Republic reported last month that investors are also scouting area homes because of their reduced prices.
 

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