Shadow inventory of distressed homes falls, a positive for housing

more great news for the market

 

Denver Post 1.2.2013

 

Residential shadow inventory fell to 2.3 million units in October 2012, a 12.3 percent drop from October 2011 and another positive sign for the housing market, according to a report released Wednesday by CoreLogic.

CoreLogic, a leading provider of information, analytics and business services, said the figure for October represents a supply of seven months and is predicted to be manageable in 2013.

Shadow inventory, also known as pending supply, refers to homes that are seriously delinquent, in foreclosure or owned by a bank but not yet on the market. Shadow inventory is typically not included in the official reporting measurements of unsold inventory.

"The size of the shadow inventory continues to shrink from peak levels in terms of numbers of units and the dollars they represent," said Anand Nallathambi, president and CEO of CoreLogic. "We expect a gradual and progressive contraction in shadow inventory in 2013 as investors continue to snap up foreclosed and REO (bank-owned) properties and the broader recovery in housing market fundamentals takes hold."

Over the three months ending in October 2012, serious delinquencies, which are the main driver of the shadow inventory, declined the most in Arizona (13.3 percent), California (9.7 percent), Michigan (6.8 percent), Colorado (6.8 percent) and Wyoming (5.9 percent).

Mark Fleming, chief economist for CoreLogic, added: "Almost half of the properties in the shadow are delinquent and not yet foreclosed. Given the long foreclosure timelines in many states, the current shadow inventory stock represents little threat to a significant swing in housing market supply.

"Investor demand will help to absorb the already foreclosed and REO properties in the shadow inventory in 2013."