Home prices may be rising, but many of these gains are based on the demand for distressed properties, especially among first-time home-buyers and deal-seeking investors, CNBC reported. And those distressed properties are increasingly in short supply, as banks modify troubled loans and courts work through their backlog of foreclosure-related proceedings.
In Phoenix, for example, prices are up 20 percent year-over-year because foreclosures are down to 23 percent of the market this year, whereas last year, those properties comprised half of the market.
Mark Hanson, a housing analyst, called the decreasing supply of foreclosures “artificial” because it’s a result of banks holding back some properties in distress and some of the loan modifications they’re working out are bound to fail
Markets in California and Florida, in the Midwest and in Atlanta could also see this trend, CNBC said. [CNBC]