While there's been considerable talk about the nation's shadow inventory -- that is, homes that are in foreclosure, or homes not being put up for sale until the market improves -- being a factor that holds back home prices, it seems that something now being referred to as "shadow demand" could have a positive impact, according to new data from Altos Research. This pent-up demand from potential borrowers is due largely to the financial problems millions nationwide ran into over the course of the last several years. In general, these consumers would have liked to have entered the housing market years ago but were not able to do so for various reasons, both because of their personal finances and the uncertainty in the broader housing market.
[Credit Score Tool: Get your free credit score and report card from Credit.com]
Now, with the various improvements seen nationwide not only in housing but the broader economy, it may be that these people who fell behind in the past are getting ready to flood the market and significantly increase demand for what is currently a rather limited number of available properties, the report said. In some areas, they may have already started to trickle in. That, in turn, will likely lead to even more price increases that could help to bring more underwater homeowners back out from under negative equity; the Federal Reserve Board recently estimated that if home prices were to gain 10 percent of their current values, it would bring about 40 percent of these borrowers back to being right side up.
[Featured Products: Research and Compare Mortgage Rates at Credit.com]
However, all these buyers coming back into the market might not be a positive for other buyers. Recent polls show that many are already growing frustrated with their difficulties in closing deals because of already-high competition for listed properties.
Image: iStockphoto