San Clemente, CA (PRWEB) January 25, 2013
Bloomberg TV reports that the total shadow inventory could be as high as 3.67 million homes.
Shadow inventory is a term used to describe homes that are purposely kept off the market, the motivation being to drive up demand.
"When demand goes up, with limited inventory, it's going to drive prices up too," says Sabina Brown, a Realtor with Team OC Realty in San Clemente, California and editor of sanclementeliving.com. "You would be surprised at how a limited inventory can affect people's psyche. You have properties that receive hundreds of offers in the course of a weekend. Keep in mind, only one can be selected. This can be discouraging for first time home buyers."
"It's really difficult for families who are first time buyers. They've saved up for years and want to take advantage of the low mortgage rates, but they're getting outbid by all cash buyers." says Alissa Alvarez, a licensed California mortgage banker and contributing columnist for findmywayhome.com.
Interest rates continue to remain low since Federal Reserve Chairman Ben Bernanke announced in December of 2012 that the Federal Reserve would continue purchasing $40 billion worth of mortgage backed securities every month. The goal being to help stimulate the economy and to drop unemployment below 6.5%.
"It would be helpful if more pressure were put on banks to release some of that inventory. Americans purchasing homes will help the economy more than the Fed purchasing mortgage backed securities from banks," said Alvarez.