Shadow Inventory Hangs Over Real Estate Market
INDUSTRY NEWS, SHASTA COUNTY
January 8th, 2010
Experts have been trying to peg the number of foreclosed homes banks are sitting on while pondering when to list them for sale. Core Logic, a subsidiary of First American Title Insurance Company, estimated that number at 1.7 million as of September 2009, according to an article cited in a news release by the California Association of Realtors. This compares to 1.1 million one year earlier.
This is referred to as “shadow inventory” because it is a supply of properties not yet recognized in the marketplace. This inventory includes foreclosed homes, properties taken back through deeds in lieu of foreclosure and loans at least 90 days delinquent.
The “visible supply” according to Core Logic was 3.8 million units in September 2009 which is significantly lower than the 4.8 million units available a year earlier. At current sales rates, that represents a 7.8 month supply compared to 10.1 months the previous year.
The conclusion is we still have a huge inventory of properties to sell before the real estate market returns to normalcy. The only way this time period will shorten is if the economy in general starts adding permanent jobs that pay a living wage. Some of last year’s increase in sales activity was attributed to the federal tax credit and very low interest rates. Some fear once the incentives expire, sales will fall and home prices will follow.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL SALES EXPERIENCE
