One-third of housing market ‘in the shadows’

Shadow inventory: Dark blue=bank-owned homes, light blue=homes in foreclosure and red=delinquent properties not yet in foreclosure/CLICK TO ENLARGE

For every two homes on the U.S. housing market, there’s one foreclosure or potential foreclosure yet to be listed, housing tracker CoreLogic reported in its latest “shadow inventory” report.

As of January, the nation’s shadow inventory leveled off at 1.6 million U.S. homes.

“The shadow inventory remains persistent even though many other metrics of the housing market show signs of improvements,” said Anand Nallathambi, president and CEO of the O.C.-based real estate date firm.

Shadow inventory consists of homes whose owners have failed to make monthly mortgage payments for 90 days or more, homes in some stage of foreclosure or bank-owned homes. Economists follow shadow inventory because it amounts to a hidden segment of the distressed market that pulls down prices for all homes and hampers the recovery.

CoreLogic reported:

As of January, there were 1.6 million housing units in the shadow inventory, roughly half of the 3 million homes currently seriously delinquent, in foreclosure or bank owned.
  • That’s unchanged from the previous shadow inventory report based on October data. The amount of shadow inventory has remained virtually unchanged since the spring. (See chart)
  • It would take six months to sell all the homes in the shadow inventory based on the current sales pace.
  • However, the latest figures are down from January 2011 levels, when there were 1.8 million units in the shadow inventory, which would in theory take eight months to sell.
  • Of the 1.6 million properties in the shadows, 800,000 are seriously delinquent, 410,000 are in some stage of foreclosure and 400,000 are bank-owned.
  • More than 510,000 homes in the shadow inventory are in California, Florida and Illinois, making up more than a third of the national total.

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