Shadow Inventory may be 1.7 million homes
I am getting conflicting numbers on the “shadow inventory” of REO property. This can have a major impact on homes for sale Everett. First let me define shadow inventory and REO property. Shadow inventory is the foreclosed homes not yet on the market. REO property is the real estate owned by banks. REO property can be on the market or not yet available for sale.
Last April the San Francisco Chronicle and many other media outlets were reporting we had about 600,000 homes owned by lenders that were not on the market. It was reported that the lenders were not getting these homes ready for sale but simply holding them for better market conditions. Some reports suggested that as many as 70% of the REO homes were not on the market.
The problem with shadow inventory is they tend to degrade neighborhoods. They tend to get rundown quickly by attracting squatters, vandals and animal critters. They also depress prices for homes for sale Everett in 2 ways. One they depress resale values and two they make it hard to refinance.
There is real benefit for investors and regular buyers because these homes mostly have nothing wrong with them they just smell bad.
Now the real problem is that they will threaten any significant market recovery until they filter through and become available for sale.
The Really Bad News
Now here’s the really bad news. First America Core Logic published a report that as of September 2009 we have 1,700,000 homes in the shadow inventory. The report is in conflict with the April reports and stated that one year ago we had 1,100,000 in the shadow inventory. Because the Core Logic report is a real data source I tend to believe it much more the unreliable newspapers. The Core Logic does offer some good news in that the total inventory of housing for sale did drop somewhat. One year ago it was 5.7 million and now the total inventory is 5.5 million. But wait that silver cloud has a black lining.
Right now based on current rates would take about 11.1 months to sell. But we have artificially low interest rates and a first time buyers credit that will end next spring. When the Fed stops buying mortgage backed securities next spring interest rates will climb quickly. Combine that with a buyer credit expiring and I think it will take a lot longer to sell any home for sale Everett.
Jim Johnson and any comments are welcome.
How do they get away with THAT?
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