The Shadow Market.

The Market

This is scary, according to REALTOR September 2010, about 2.4 million properties nationwide are considered to be part of “shadow” inventory. This is a new term for me, so it must be for you too. Shadow inventory is defined by NAR as REO property, which is bank owned aka foreclosure or those near foreclosure. Those near foreclosure are homes where the owner is 90 days or more late in payments. Properties NOT counter are those that are less than 90 days late, those where the owner is trying to modify a mortgage. Also not counted are homes already in foreclosure or on the market as short sales. If those properties were counted in the “shadow” inventory then the number would be closer to 7 million distressed properties nationwide.* YIKES!

On a positive note...banks are methodically bringing foreclosed homes onto the market and not dumping oodles of inventory onto the market which would destroy already shaky pricing, driving prices down very quickly. Similarly in recent weeks several large banks, Bank of America, Chase and GMAC have curtailed foreclosures in many markets due to problems with their procedures and how they are carrying out the foreclosure and eviction process. Hmm, stay tuned.
*REALTOR September 2010 page 9