Analysts pegged the number of foreclosed properties that have not been released by banks somewhere in the 5+ million range. So, if this is true, what we've seen happening lately (even here) - multiple contracts, heard it as high as 32 competing bids for one 'foreclosure' property - for lack of a better word, is somewhat inflated. In the sense, that the crisis ain't over yet.
Short-sale, is another story. Though, banks are getting better processing short-sale. A few months ago, we wrote about that there are more short-sale than foreclosure on the market. The myth that foreclosure tends to hit lower priced homes, while short-sale tend to hit mid priced homes is no longer true. A quick look into MRIS database, for Washington DC and Northern Virginia hoods, there are 422 active listings under foreclosure with price range from the lowest $24,000 to highest $3.689 million! 85 listings or twenty-percent homes priced over $400,000. So, the pinch starts to hurt prime borrowers.
On the short sale side, there are 717 active listings from the lowest $50,000 to highest $5.5 million. Twelve listings are homes over a million dollars. Thirteen percent of homes is priced between $500k to $1M. The crowded field are homes on market under $500,000 with average price somewhere in the neighborhood of $266,032.
The point I want to make is this: inventory of distressed properties still cloud the market. Prices can go down one more level before it stabilized. Because no one knows for sure when the next batch of foreclosures going to cram the market. Only lenders know what they're holding in their bags.
The longer view.