Unfortunately the housing market is still trying to find a bottom. Since this is the main cause of the current crisis, it is likely that a better housing market or at least a stable housing market that will begin to turn things around for the economy. Foreclosures are stilling running at record rates, although they do seem to be leveling off. However, a strange occurrence is happening and one which might explain the leveling off in foreclosures. It is referred to as the "shadow inventory" of foreclosed homes. According to RealtyTrac, a company who compiles nationwide statistics on foreclosures and home sales, believes that there are in the neighborhood of 600,000 to 700,000 properties nationwide that banks have repossessed but not put on the market for sale.
RealtyTrac suggests there could be several factors influencing this "shadow" market. First, it's likely there are just so may homes that it's hard to get them on the market and sold. Normally there are roughly 150,000 - 200,000 foreclosures a year. Recently, they have been running about 80,000 per month or 8 times normal levels.
With banks under a considerable amount of stress, it could be that banks are deferring sales to put off having to acknowledge balance sheet issues and losses. They also don't want to flood the market with foreclosures, driving prices down further.
Eventually banks with need to address this "shadow inventory" of homes on balance sheets.
