Current residential shadow inventory as of July 2011 declined slightly to 1.6 million units – representing a supply of five months – from a six-month supply of 1.9 million units one year earlier, according to CoreLogic. It’s also down from April 2011 when shadow inventory stood at 1.7 million units.
The reason is simple: Banks are disposing of distressed assets faster than they’re adding new ones into the system.
CoreLogic estimates the shadow inventory, also known as pending supply, based on the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent (90 days or more) – properties most likely to become bank-owned listings (REOs). Properties not yet delinquent aren’t included in the estimate of shadow inventory.
• The shadow inventory of residential properties as of July 2011 fell to 1.6 million units, or a five-month supply, down from 1.9 million units, or a six-month supply, as compared to July 2010.
• Of the 1.6 million properties currently in the shadow inventory, 770,000 units are seriously delinquent (2.2-months’ supply), 430,000 are in some stage of foreclosure (1.2-months’ supply) and 390,000 are already in REO (1.1-months’ supply).
• As of July 2011, the shadow inventory is 22 percent lower than the peak in January 2010 at 2 million units, an 8.4-months’ supply.
• The total shadow and visible inventory was 5.4 million units in July 2011, down from 6.1 million units a year ago. The shadow inventory accounts for 29 percent of the combined shadow and visible inventories.
• The aggregate current mortgage debt outstanding of the shadow inventory was $336 billion in July 2011, down 18 percent from $411 billion a year ago.