Many parts of the Philadelphia region continue to struggle with distressed-home inventory.
South Jersey, especially, is mired in short sales and foreclosures - the product of a logjam of several years in the legal system.
A short sale occurs when the lender agrees to accept less from the seller/borrower than the balance of the mortgage.
From what I have seen in my own neighborhood, lenders continue to drag their feet getting these houses from foreclosure to the resale market, often with devastating results.
No one seems able to get the lenders to move off the dime to make some money, which shocks me.
The numbers of short sales and so-called REOs - real estate owned by lenders through repossession after foreclosure - concerns many observers.
"Nationwide, quarterly distressed saturation - or the percentage of REOs and short sales to all sales - increased . . . in August 2015, from 15.4 percent to 16.1 percent," said Alex Villacorta, vice president of research and analytics at Clear Capital, a provider of data and solutions for real estate asset valuation and collateral risk assessment.
With stocks plummeting in recent weeks and the global economic impact on the U.S. economy and housing markets still unknown, Villacorta said, distressed sales remain a critical market indicator.
Distressed-home inventory has kept overall prices from recovering as quickly as real estate agents and builders had hoped.
In the second quarter, home values regionwide remained 14 percent below what they were when the housing bubble burst here in August 2007, said Kevin Gillen, chief economist for Meyers Research and senior research fellow at Drexel University's Lindy Institute for Urban Innovation.
Think glass half-full, and that means values are up 9 percentage points since third quarter 2007.
Remember, not all zip codes shared equally in the market's collapse. Those in desirable school districts held value or lost little, for example, as did the well-heeled reinforced prices in Center City. (Add your complaint about the tax abatement here.)
What concerns Villacorta is the coming of winter, and he's not referring to the dire predictions of the Old Farmer's Almanac.
"While we are closer to historic, pre-2008 rates of distressed saturation, which hovered around 4 percent of all sales, increases in distressed activity leading into winter could shift momentum toward peak distressed saturation levels of 40 percent," Villacorta said.
For some reason, the northeastern United States was the only region to experience a decrease in distressed saturation, where rates dipped 0.3 percentage points, from 14.3 percent to 14 percent in August, he said.
Because of tightened credit rules after the financial meltdown of September 2008, investors comprised the largest group of distressed-home buyers in just about every market during the depths of the real estate downturn.
"In Act One, at the start of the downturn, distressed properties were an albatross around housing's neck," Villacorta said. "In Act Two, between 2011 and 2013, investors stepped in, buying, rehabbing and selling or renting distressed properties," lifting demand and prices.
"One thing is clear: When it comes to housing, REOs and short sales are not a passing fad," he said, noting that the recent stock market uncertainty "leaves the economy and housing tenuous, at best."
"The last third of the year will reveal whether the housing recovery can withstand broader global volatility," Villacorta said. "If investors pull out, oversupply of distressed inventory could bring us back to Act One."