JIM BUCHTA
Shadow inventory shrinking, but still lurking Wondering when the housing crisis is going to be over? Here's one place to look: shadow inventory, or the number of houses that are likely to hit the market as a foreclosure or short-sale. CoreLogic said [Wednesday] that the pending supply of distressed properties nationally (these are not yet on the market) fell slightly during January to 1.9 million units, or a nine-month supply at the current sales pace.
A year ago that shadow inventory stood at 2 million units. Most of the pending supply comes from mortgages that are seriously delinquent; the rest are in some stage of foreclosure or are already bank owned.
The highest levels of distressed inventory was in New Jersey (25 months), Illinois (23 months) and Maryland (21 months). In Minnesota, the monthly supply of distressed sales fell from 16 months in January 2010 to 14.8 months last January.
Still that supply is causing havoc in the real estate numbers. In February, three out of five homes sold was either a foreclosure or short sale. That in turn pushed the median sale price down more than 10 percent to $142,500, a low for February since local groups began tracking it.
The report also said that there are nearly 2 million houses with loans that are more than 50 percent larger than the value of the house, and not all of them are in default or in the foreclosure process. This is an important figure to watch because these mortgages are likely to end up in foreclosure and to become part of the shadow inventory.
