Thursday, March 31, 2011

Nine Months of Shadow Inventory Linger

CoreLogic reported that the residential shadow inventory as of January has declined to 1.8 million units. This represents a nine-month supply that can only slightly be treated via modification and short sales.

The number was calculated by including the number of distressed properties not listed on MLS that are seriously delinquent, in foreclosure, or REOs. Transition rates are used to determine which are most likely to become REO properties, and those that are not yet delinquent, though they may be soon, are not included in this estimate.

Of the 1.8 million that are currently shadow inventory, 870,000 are seriously delinquent, 445,000 are in foreclosure, and 470,000 are in REO. There are also around 2 million negative equity loans that are likely to become shadow supply in the near future. New Jersey, Illinois, and Maryland have the highest level of distressed months’ supply, and North Dakota, Alaska, and Wyoming have the lowest.


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