CoreLogic, a provider of analytical information about the housing market, reported that the current residential shadow inventory as of January 2012 was 1.6 million units, approximately the same level reported in October 2011. CoreLogic estimates shadow inventory by calculating the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent, in foreclosure and real estate owned (REO) by lenders.
On a year-over-year basis, shadow inventory was down from January 2011, when it stood at 1.8 million units. Currently, the flow of new seriously delinquent (90 days or more) loans into the shadow inventory has been offset by the roughly equal flow of distressed sales (short and real estate owned).
"Almost half of the shadow inventory is not yet in the foreclosure process," said Mark Fleming, chief economist for CoreLogic. "Shadow inventory also remains concentrated in states impacted by sharp price declines and states with long foreclosure timelines."
Anand Nallathambi, president and CEO for CoreLogic, added: "The shadow inventory remains persistent even though many other metrics of the housing market show signs of improvements. In some hard-hit markets, the demand for REO and distressed property is now outstripping supply. As we move into what is traditionally the peak selling season for real estate, servicers will certainly be watching closely to see if now is the time to move more inventory out of the shadows.”
Some data highlights from the report include:
• The shadow inventory is approximately half the size of all visible inventory listings. For every two homes available for sale, there is one home in the "shadows."
• The total percent of borrowers who were ever 60+ days delinquent (irrespective of delinquency status today) increased to 15.5% in January 2012, up from 14.3% a year ago.
• Florida, California and Illinois account for more than a third of the shadow inventory. The top six states, which would also include New York, Texas and New Jersey, account for half of the shadow inventory.
• The highest concentration of shadow inventory is for loans with loan balances between $100,000 and $125,000. More importantly, while the overall supply of homes in the shadow inventory is declining versus a year ago, the declines are being driven by higher balance loans. For loans with balances of $75,000 or less, however, the shadow is still growing and is up 3% from a year ago.