(TheNicheReport) -- Encouraging reports from real estate analysts indicate an uptick of median home prices in many metropolitan areas, as well as a curtailing of foreclosures and even shortages of listings in some markets. Demand for distressed properties that can be turned into rental properties is making some areas of the United States seem like they are operating under normal market conditions, but a full recovery of the American housing economy is still many years away.
A significant portion of the real estate activity that has taken place in 2012 reveals that investors have been busy snapping up distressed properties, which include foreclosures, short sales and homes that are listed on the Real Estate Owned (REO) portfolios of mortgage lenders. There is a shortage of these distressed properties listed for sale, but that does not mean that the American foreclosure epidemic is gone. There have been a couple of foreclosure moratoriums; one during the early days of the recession, and a recent one that preceded the National Mortgage Foreclosure Settlement of 2012. Real estate investors who are waiting on more distressed properties to purchase will have to wait longer, and this may have a cooling effect on the housing recovery.
Real estate investors do not necessarily have to wait for more foreclosures or REO properties to become available. They will settle for market prices, and this is an area of concern due to the amount of mortgages considered to be underwater. Under normal real estate market conditions, many homeowners would be happy to list their homes in order to take advantage of the demand, but the fact is that many homeowners are not able to become sellers at this time due to being underwater or because of too many junior liens encumbering their properties.
The current situation in the American housing market points to its decline having finally hit bottom, but the outlook for a full recovery may still be years away. Savvy would-be sellers are aware of this, and they are not interested in selling at this time. They are willing to sit back and wait until they see major price increases. In some metropolitan areas, bidding wars between investors and opportunistic buyers are taking place, but mostly on rock-bottom distressed properties. The bulk of U.S. housing consists of suburban single family residences, and the demand for these homes is less than stellar at this time.
Further evidence of a slow-mowing housing recovery can be seen in the forecast of home prices, which are not expected to rise in unison. Analysts expect a recovery that is shaped like a long flight of steps, in which a run-up in home prices is followed by a flat period of longer duration.