Shadow Inventory Threatens Further Home Price Declines
Shadow Inventory Threatens Further Home Price
Declines
A report issued on Monday showed that the nation's “shadow inventory,” or the homes either already repossessed by lenders or seriously delinquent jumped by 10 percent over the last year, to a supply of eight months at the current pace of sales.
The report, released by the research firm CoreLogic, indicated that there were 2.1 million such homes at the end of August, up from 1.9 million at the same time in 2009. Adding the shadow inventory to the listed homes for sale would increase the total number of homes available to 6.3 million, compared with 6.1 million at the end of August, 2009.
At the current pace of sales, it would take 23 months to exhaust that supply, compared to a rate of 6 to 7 months which economists associate with a healthy housing market. The looming potential supply increases the odds of further declines in prices, and the continued presence of the shadow inventory is expected to hinder demand, as some potential buyers wait out the possible price declines. Shadow inventory, meanwhile, continues to increase as banks put off seizing homes with delinquent mortgages due to the recently developing foreclosure fraud investigations.
A handful of lenders have stalled the foreclosure process because they already own a glut of foreclosed properties, while others have voluntarily stemmed the process as investigators continue to probe lenders' practices. The voluntary halts were brought on by the recent “robo-signing” scandal, in which a number of the nation's largest lenders were accused of pushing through foreclosures with inaccurate or improperly notarized paperwork.
A report issued on Monday showed that the nation's “shadow inventory,” or the homes either already repossessed by lenders or seriously delinquent jumped by 10 percent over the last year, to a supply of eight months at the current pace of sales.
The report, released by the research firm CoreLogic, indicated that there were 2.1 million such homes at the end of August, up from 1.9 million at the same time in 2009. Adding the shadow inventory to the listed homes for sale would increase the total number of homes available to 6.3 million, compared with 6.1 million at the end of August, 2009.
At the current pace of sales, it would take 23 months to exhaust that supply, compared to a rate of 6 to 7 months which economists associate with a healthy housing market. The looming potential supply increases the odds of further declines in prices, and the continued presence of the shadow inventory is expected to hinder demand, as some potential buyers wait out the possible price declines. Shadow inventory, meanwhile, continues to increase as banks put off seizing homes with delinquent mortgages due to the recently developing foreclosure fraud investigations.
A handful of lenders have stalled the foreclosure process because they already own a glut of foreclosed properties, while others have voluntarily stemmed the process as investigators continue to probe lenders' practices. The voluntary halts were brought on by the recent “robo-signing” scandal, in which a number of the nation's largest lenders were accused of pushing through foreclosures with inaccurate or improperly notarized paperwork.
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