[quote=Jazzman]Bearishgirl, everyone has their own definition. Here’s one courtesy of Investopedia:
A term that refers to real estate properties that are either in foreclosure and have not yet been sold or homes that owners are delaying putting on the market until prices improve. Shadow inventory can create uncertainty about the best time to sell (for owners) and when a local market can expect full recovery. Also, shadow inventory typically causes reported data on housing inventory to understate the actual number of inventory in the market.
Corelogic defines it as homes seriously delinquent, in foreclosure and owned by lenders.
Standard and Poor claims it is all delinquent homes, not just REOs.
This obviously doesn’t help with determining any kind of precision in numbers, and it probably follows the more complex the definition, the more wild the variances in guesstimates.
The OP may be better served with defining his/her own goal in conducting the research, and then zeroing in on data that is most relevant to it.[/quote]
Jazzman, as to the Investopedia definition of “shadow inventory,” I don’t agree with it. Property owners with “equity,” especially those who have substantial equity or own free and clear have MANY CHOICES of how OR whether to dispose of their property. They are NOT lurking in the “shadows.” They can move on (even out of state/country) and put their properties into rental service and hire a property mgr and STILL be far “above water” and able to financially “manage” vacancies. There are thousands of these owners out there!
I predicted here that this (inventory shortage) would become dire just a few short months ago. At that time, I could see it already happening …
I know MANY local property owners with substantial equity or who are “free and clear.” These types of property owners have always had the same mindset from day one. They WILL choose to wait for a better day to sell simply because they (or their heirs) CAN!
The vast bulk of the listings today are “desperately-need-to-sell” properties!
Buyers out there today are making offers which attempt to “cram down” neighborhood values to comport with the recent (85% “distressed”) sold prices of properties that have closed at a price below (or far below) market (ESP the SS’s up to and including the “corrupt SS’s” [which were sold to relatives/friends of the listing agent]). This is causing well-kept “equity” properties to be “artificially” undervalued (in appraiser-speak). I don’t have to tell you that EVERY single equity owner knows this (yes, even the 80+ year olds)!
Today’s local buyers are frustrated (and rightly so) because there is little, if any “quality inventory” on the market. Well, bargain-seeking buyers can’t have it both ways. “Distressed” homedebtor-sellers, much more often than not, have NOT had the ability and/or motivation to maintain their properties in recent years. Most of these SS listings and newly-acquired REO’s (before lender rehab) are dirty and in poor physical shape and some are actually stripped.
That is your inventory.
The SS homedebtor-sellers are likely behind in everything from PITI/HOA to child support and income taxes and could also have possible judgment liens against them. All of this (indirectly) becomes the potential SS buyer’s problem when their offer is accepted and it is insufficient and/or needs more $$ kicked into the transaction to “make it all work.”
It’s the conundrum of the buyer wanting the lowest of the low price (to “protect” them against “overpaying”) but ALSO with that low price desiring location, lot and condition.
