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Where is the “shadow inventory” lurking? When will it rear its ugly head?

Where is the “shadow inventory” lurking? When will it rear its ugly head?All of the experts seem to agree that the “shadow inventory” is out there.  Houses that have gone through the foreclosure process but for whatever reason are being maintained in inventory but have not been placed on the market for resale.

The motivation behind the phenomenon has been described as being anything from sinister to shrewd. Are these institutional sellers simply buried under piles of paperwork, stymied by litigation, or simply trying to stabilize the market in an effort to reap top dollar for their properties?

Whatever the reasons, in Coweta County Georgia there is a significant difference between the number of monthly foreclosures and REO and HUD homes showing up in the marketplace.

I get calls all of the time about houses that have been sitting empty for long periods of time while would-be buyers await the opportunity to make an offer.

The shadow inventory is out there. And it can affect our market dramatically.

And until it is dealt with in a proactive way a lot of uncertainty will remain.

 

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Comment balloon 13 commentsRichard Weisser • February 08 2012 09:34AM

Comments

If I were a buyer or seller today I sure would be confused...hearing the gloom and doom on a national level always seems to trump what is happening locally still unfortunatley

Posted by Kristin Johnston - REALTOR®, Giving Back With Each Home Sold! (RE/MAX Realty Center ) over 8 years ago

In my areas there are a lack of listings, so I wish they would just list the darn things. They would sell them for what there worth now and be done holding them.

Posted by Chuck Carstensen, Minnesota Real Estate Expert (RE/MAX Results) over 8 years ago

I see the opposite... at least in the suburbs!

Posted by Matthew Johnson (Keller Williams Premier Realty) over 8 years ago

Kristin...

I agree, but my point is that in the long run, I think that it would be better to pull the band-aid off and get it over with. Then we could all move on. Thanks my friend.

Chuck...

We NEED these listings too. I have buyers waiting to grab them. THX.

Matthew...

Real estate is local ... but when there are 200 house advertised for foreclosure in the paper and about 20 come on the market ... something is up! Thanks.

Posted by Richard Weisser, Richard Weisser Retired Real Estate Professional (Richard Weisser Realty) over 8 years ago

Richard,  No doubt it is creating uncertainty!  I just pulled all the title info yesterday on a home that should have been on the market long ago and I have a buyer what would likely pursue it aggressively.  My mind does not think think like the big boys apparently. I say If its ready for the market then MARKET!

Posted by John McCormack, CRS, Honesty, Integrity, Results, Experienced. HIRE Me! (Albuquerque Homes Realty) over 8 years ago

I hate to see those houses vacant for so long, they need someone to heat them and care for them. A cold damp house invites mold and we know how buyers feel about the "M" word.

Posted by Cynthia Larsen, Independent Broker In Sonoma County, CA over 8 years ago

There are a few homes sitting empty but not all tham many in my area.

Posted by William Feela, Realtor, Whispering Pines Realty 651-674-5999 No. (WHISPERING PINES REALTY) over 8 years ago

I see it as a business plan - hold them off the market while hoping a decreased inventory may stabilize prices....while they deteriorate!

Posted by Gary L. Waters Broker Associate, Bucci Realty, Fifteen Years Experience in Brevard County (Bucci Realty, Inc.) over 8 years ago

Everyone I talk to who is REALLY connected to the banks says that the amount of shadow inventory is much lower than the media talks about.  These are people here in California talking about some of the hardest hit foreclosure regions in the US.  I think what's available is lower and the banks are letting it go in phases to avoid oversupply in struggling markets.

Posted by Bryan Robertson over 8 years ago

A strange thing showed up in our 2010 census..  Many homes that are not occupied, not for rent, not for sale, but are in the county.. I don't think they are shadow inventory, just not sure what they are. 

Posted by 1~Judi Barrett, BS Ed, Integrity Real Estate Services -IDABEL OK (Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745) over 8 years ago

Good morning Richard,

No one is probably "in the know" about just how many homes may be lurking in the shadows.  Between the Washington and Media "spins", the public never gets accurate numbers on anything!

Posted by Lisa Von Domek, ....Experience Isn't Expensive.... It's Priceless! (Lisa Von Domek Team) over 8 years ago

I agree, what is out there lurking....  Too many homes just sitting, empty and taking a beating.  An empty home is not a good thing.  Will be interesting, I'm not sure what they ( the banks) are doing holding on to so much inventory.  I see the NOD's every day vs. what is for sale and the numbers don't match... especially when I have sellers receiving calls from banks telling them instead of a short sale they will grant them a deed in lieu 

Posted by Kim Boekholder Utah Real Estate, Broker, Results Real Estate (Results Real Estate 801.580.5624) over 8 years ago

The shadow inventory is out there, no doubt about it.  I'm just afraid if it all hits at once, the market is just going to crash and burn.

Posted by Cindy Edwards, CRS, GRI, PMN - Northeast Tennessee - 423-677-6677 (RE/MAX Checkmate) over 8 years ago

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