Surging Shadow Inventory Means Actual Housing Inventory Has Barely Budged At All

shadow inventory

A new report from FirstAmerican Core Logic (via Jonathan Miller) offers an update on shadow housing inventory.

Here are the key stats:

As of September 2009, First American CoreLogic estimated there was a 1.7‐million‐unit pending supply of  residential housing inventory, up from 1.1 million a year earlier.  Pending supply, sometimes referred to as  “shadow” inventory, estimates real estate owned (REO) by banks and mortgage companies, as a result of  foreclosures and other actions, such as deeds in lieu, as well as real estate that is at least 90 days delinquent.   Normally shadow inventory would not be included in the official measures of unsold inventory. At the current  sales rate, the pending supply is 3.3 months, up from 2.4 months a year ago. The months’ supply measures how  quickly the inventory will run off given the current sales rate.  

• The visible supply of unsold inventory was 3.8 million units in September 2009, down from 4.7 million a year  earlier. The visible inventory measures the unsold inventory of new and existing homes that are currently on the  market. The visible months’ supply fell to 7.8 months in September 2009, down from 10.1 months a year earlier.  

The total unsold inventory (which combines the visible and pending supply) was 5.5 million units in September  2009, down from 5.7 million a year ago. The total months’ supply was 11.1 months, down from 12.7 a year  earlier. This indicates that while the visible months’ supply has decreased and is beginning to approach more  normal levels, adding in the pending supply reveals there is still quite a bit of inventory that will impact the  housing market for the next few years, especially in the context of the current increase in home sales, which is in part due to artificially low interest rates and the homebuyer tax credit.  


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