The real estate market has been hindered by shadow inventory since its collapse five years ago, but CoreLogic reported that the supply dropped in July.
The firm’s Shadow Inventory Report showed a six-month supply of 2.3 million units in July, a 10.2 percent decrease from a year ago when it was 2.6 million units. Of the 2.3 million units, 1 million are seriously delinquent, 900,000 are in a stage of foreclosure and 345,000 are real estate-owned.
“Broadly speaking, the shadow inventory continued to shrink in July,” said Anand Nallathambi, president and CEO of CoreLogic. “The reduction is being driven by a variety of resolution approaches. This is yet another hopeful sign that the housing market is slowly healing.”
Shadow inventory is believed to put downward pressure on home prices if it hits the market all at once, but experts don’t believe that will happen, according to the Orange County Register.
Michelle Lenahan of ForeclosureRadar told the newspaper that she doesn’t believe the shadow inventory will be dumped on the market in a single wave, but rather bit by bit.
I’ve been saying it for weeks now… our inventories are LOW! Lower than I’ve seen in a long time here along the front range, in Longmont, Fort Collins, and throughout the Denver Metro. We are seeing our days on the market shrinking for properly priced, non-short sale listings.
If you’ve ever thought about selling, now is a good time to give me a call… let’s chat about your neighborhood.
By Nick Timiraos
But appearances can be deceiving, and it remains to be seen whether the drop is the beginning of a real recovery or if inventory is being held down by sellers waiting for prices to pick up and banks moving slowly on foreclosures.
The 1.89 million homes on the market at the end of December represented a 6% decline from November and a 22.3% decline from one year ago, according to data compiled by Realtor.com.
Low inventories are an important ingredient for any housing recovery because prices could firm up in markets that have worked through their inventory.
Still, some real-estate agents aren’t celebrating because there’s a large backlog of potential foreclosures that haven’t yet been taken back and listed by banks. The inventory declines are particularly pronounced in certain states where banks have sharply slowed down foreclosures to correct document-handling abuses.
Moreover, some sellers have pulled their homes off the market to wait for a turn in prices, and that “pent up” demand from sellers could keep inventories higher once prices do rise.
Inventories were down for the year in all but one of the 145 markets tracked by Realtor.com, with Springfield, Ill., posting the only year-over-year inventory gain. The largest declines were recorded in Miami (-49.7%), Phoenix (-49.1%), and Bakersfield, Calif. (-46.6%).
The Realtor.com figures include sale listings from more than 900 multiple-listing services across the country. They don’t cover all homes for sale, including those that are “for sale by owner” and newly constructed homes that aren’t always listed by the services.