Shadow Inventory Reduced by 200,000 Units

June 22, 2011 No Comments »


The so-called shadow inventory fell to 1.7 million units in April, according to a report released today by CoreLogic.

It’s down from 1.9 million units a year ago, thanks to increased distressed sales and fewer new mortgage delinquencies.

Unfortunately, the supply hasn’t changed because of a slower sales rate – it stands at five months, the same level seen a year earlier.

But it has dropped roughly 20 percent from the two-million unit peak seen in January 2010, when the supply was on pace to take a staggering 8.5 months to clear.

The shadow inventory refers to homes that aren’t currently on the market, but are expected to be, thanks to borrowers missing mortgage payments and eventually losing their homes to foreclosure.

Shadow Inventory Represents Nearly a Third of Market

It now accounts for 29 percent of the combined shadow and visible housing inventories.

The total shadow and visible inventory stood at 5.7 million units as of April, down from 6.2 million units a year ago.

On top of the shadow inventory are two million current, but negative equity mortgages, which are more than 50 percent upside down (150% loan-to-value ratio).

In other words, home prices are going to remain under some serious pressure, even if these homeowners ride it out.

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