Will the Spike in Foreclosure Activity Stop the Turnaround in the Maryland Real Estate Market?

Recently released reports show that Maryland recently had the highest rate of foreclosures in the entire country.  An article in the Baltimore Sun provides all the details, but the bottom line is this:  The ROBO signing lawsuit stopped many foreclosures from happening, the suit is now finished, and the foreclosures will recommence.

This could not have happened at a worse time for the Maryland Housing Market.  As shown below for the Baltimore Region, the number of sales has remained steady, but the number of homes for sale has been steadily decreasing.

This decrease in inventory has caused homes to sell more quickly and for closer to asking price than has happened in the last few years.  In fact, looking at the Market Data for Columbia Maryland- 21045, you can clearly see the dramatic decrease in the number of homes available for sale.

In a normal market, when people start to see that homes are selling quickly, more houses will come on the market to take advantage of the limited supply.  It looks like any new listings might be competing with some foreclosed properties as well, and we have seen how that plays out in the market before.