Impending Flood of Foreclosure Homes

A new study from the CoreLogic real estate research firm shows that the number of houses in foreclosure or soon bound for it is increasing. As of August, this "shadow inventory" of distressed homes not yet on the market has grown 10% since last year.

Analysts are keeping a close watch on the number of possible future distressed sales because of the effect they have on home prices throughout the market. Foreclosure and short sale homes often directly compete with traditional listings, dragging down the prices of homes that might surround it. Additionally, untended bank-owned listings that are boarded make nearby houses seem less desirable.

When comparing the supply of listings for houses that are 90 days or more delinquent with the current sales pace, Minnesota ranked 13th nationwide, beating out even Michigan and several other states with metro areas that are worse off than the Twin Cities.

Those rankings, however, are not an indication of the overall health of a market.

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