The past few years have seen many changes in the real estate market and one of the biggest has been the introduction of distressed properties. A distressed sale is one in which the lending institution has foreclosed on a home then placed in on the market at a reduced price in order to facilitate a faster sale. This in turn devalues the surrounding homes since home prices are determined by what comparable properties sold for.
Current market studies are indicating that an important trend is emerging where recent home prices, less distressed sales, are finally beginning to stabilize. In fact, Analysts at Barclays Capital are heralding this as “the most important trend in the housing industry right now.”
If in fact, home prices are stabilizing that indicates that the general home buying population is beginning to realize a distressed home is “increasingly being seen as a poor substitute for a nondistressed home,” writes Stephen Kim, a Barclays housing analyst. He says it’s possible that the “bifurcation between distressed and nondistressed homes will only widen with the passage of time.”
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