Shadow Inventory Levels Falling
Shadow Inventory is a term used to describe real estate property that is either in foreclosure or have not been sold or homes that owners (or banks) are delaying putting on the market until prices improve. Shadow inventory can typically cause data on housing inventory to understate the real numbers of inventory in the marketplace.
A recent report by CoreLogic Inc shows that the Shadow Inventory is at it’s lowest levels in several years. The number of pending foreclosures is lowering as banks sell off their depressed properties and allow homeowners to sell their home for less than they owe. (Grand Rapids Short Sales).
“The decline in the shadow inventory is a positive development because it removes some of the downward pressure on house prices,” Mark Fleming, chief economist for CoreLogic, said in a statement today. “This is one of the reasons why some markets that were formerly identified as deeply distressed, like Arizona, California and Nevada, are now experiencing price increases.”
Serious mortgage delinquencies also are down, with the share of payments 90 days late dropping to a three-year low of 6.86 percent in April, according to data compiled by Bloomberg. Arizona had a 37 percent decline in serious delinquencies, more than any other state, followed by California, Nevada, Michigan and Minnesota, CoreLogic said today.
Foreclosure starts rose in May from a year earlier for the first time in more than two years after the largest U.S. loan servicers settled with states over faulty documentation. An increasing share of those distressed homes are being disposed of through short sales, in which owners sell their properties for less than they owe to avoid repossession, Blomquist said.
Read the rest of the article about home inventory at Bloomberg.