Home sale numbers are still weak, but there is a silver lining to this cloud. Shadow inventory (the number of foreclosed, bank owned homes not on the market) is finally showing some signs of stabilizing. According to the most recent report from CoreLogic, shadow inventory in January is about the same (1.6 million homes) as it was in October of 2011. This is a 200,000 unit decrease from a year ago.
“Almost half of the shadow inventory is not yet in the foreclosure process,” said Mark Fleming, chief economist for CoreLogic. “Shadow inventory also remains concentrated in states impacted by sharp price declines and states with long foreclosure timelines.”
“The shadow inventory remains persistent even though many other metrics of the housing market show signs of improvements. In some hard-hit markets the demand for REO and distressed property is now outstripping supply. As we move into what is traditionally the peak selling season for real estate, servicers will certainly be watching closely to see if now is the time to move more inventory out of the shadows,” said Anand Nallathambi, president and CEO for CoreLogic.
While this is good news for current homeowners looking to sell in the near future, real estate investors are still leery of both the number of delinquent homes that haven’t begun the foreclosure process and the current number of homes yet to be released on the market. Keep in mind, a third of the shadow inventory comes from three states (Florida, California, and Illinois), and half the inventory can be accounted for by the top six states (add New York, Texas and New Jersey).
CoreLogic Reports Shadow Inventory as of January 2012 Remains Flat.