Thursday, November 11, 2010

Shadow Inventory may take Years to Clear

Shadow Inventory are houses that need to be sold, that want to be sold, but the owner of the house has basically given up on selling it untill situations improve with the housing market.
Say it is a couple like myself and my wife who own a 1-bedroom condo and want to buy a house. However, we are underwater on our condo, so we are trapped there untill the market improves. Even though we desperatly want to move up to a larger house and have the income and credit to do so, the condo is an albatross.
As soon as prices improve, that condo will be going up on the market, making it one of many shadow inventory properties waiting to be sold. It is not listed now in current supply, but it is lurking in the shadows waiting to join the supply as soon as economically possible.

Check out this blurb about Shadow inventory below...

If you thought the U.S. housing market is showing any signs of improvement, a
new report by New York City-based Fitch Ratings puts the damper on that view.

Fitch says seven million homes in the "shadows" will take 40 months to

The agency defines the shadow supply of properties as loans that
are delinquent, in foreclosure, or real-estate-owned (REO) by the servicer.
Fitch says based on recent liquidation trends, it will take at least 3 ½ years
to clear this existing distressed inventory. reports that
according to the ratings agency, the number of months between the date of the
borrower's last payment and the date of liquidation has steadily increased over
the past several years, and is now at more than 18 months on average.

Fitch says that is the highest figure on record.

Clearly there is a ton of inventory on the market, but even more awaits in the shadows. This blog will continue on untill the housing market returns to normal and my condo is sold. Housing Fear is still alive!

1 comment:

Anonymous said...

why don't you update? like your blog.

View My Stats