Shadow Inventory Looms With 5-Month Supply

December 21, 2011

The “shadow inventory” -- properties that are in foreclosure limbo and have not yet come to light on banks’ balance sheets -- has fallen slightly over the last year. Shadow inventory as of October 2011, the latest data available, stood at 1.6 million units or a 5-month supply. In October 2010, shadow inventory was at 1.9 million, or a seven-month supply, CoreLogic reports. A one-month supply of shadow inventory is considered more healthy for the housing market, a level that hasn’t been seen in years.

“The shadow inventory overhang is a large impediment to the improvement in the housing market because it puts downward pressure on home prices, which hurts home sales and building activity while encouraging strategic defaults,” Mark Fleming, chief economist for CoreLogic, said in a statement.

The states with the largrest inventories are Florida, California, and Illinois, which have more than a third of the nation’s shadow inventory, according to CoreLogic. 

Source: CoreLogic

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