Be careful in subscribing to cospiracy theories, 4 years is too high of an estimate and inaccurate to include all phases of distress and potential distress into the numbers. I track foreclosures and distressed in a single zip code for two years using a variety of sources including visiting them in person and I am not finding a significant number of nod’s never getting to market, it takes a while but they all eventually get listed. I do believe that last year their seemed to be a bunch of them not being listed but they are hitting the market now and I don’t think the banks are in lockstep, they are competing. There are not 4 or 5 houses being purposely held off the market, sitting vacant for every one house listed, I’m just not buying it.
The term “shadow inventory” is not his, I’ve heard it for years but the term “phantom inventory” was coined by a blogger here and the main stream media has credited it. Forgive me if I am wrong but I think it was ocrenter or one of our oc guys who invented it (it escapes me but it is one of our regulars), I’ve seen him credited in articles on cnbc and the wsj.
Are there a dumpload of foreclosures in the pipeline, YES. Will it get worse because every day more and more are underwater making foreclosure the only option, YES. Will prices continue to fall, YES. But 4.2 years is too high of an estimate plus that number is based on today’s sales volume and even I will admit there are “shadow” buyers out there, because I’m one of them. However there is more shadow inventory than shadow buyers which is why prices will continue to decline for at least a year, some call that supply and demand.
