Here's another Just Listed market watch update: The number of unlisted bank-owned houses and potential foreclosures as of August 2010 rose 10 percent compared with last year at this time, according to CoreLogic, a real-estate research firm. The report is significant because it's an indication of how many additional homes might hit the market in the coming months. According to the latest data that shadow inventory now stands at an eight-month supply, up from five months a year ago. CoreLogic calls this "shadow inventory," or pending supply, and it looks at how many properties are seriously delinquent (90 days or more), in foreclosure or are bank owned but not currently listed on the MLS.
The "visible supply" of houses on the market, those currently on the market, rose from 11 months a year ago to 15 months in August. By combining the visible and shadow inventory, the overall supply of unsold homes nationmwide rose to 23 months from 17 months a year ago. The market is considered at equilibrium when there's a six- to seven-month supply. CoreLogic's chief economist, said that "weak demand for housing is significantly increasing the risk of further price declines in the housing market."
"Distressed supply," or the ratio of the number of properities that are 90-plus days or more delinquent to the number of sales, in the Twin Cities during August stood at 17.4-months. Not surprisingly, the biggest shadow markets were in Florida, Michigan and California.
Here's a chart that shows a recent increase in shadow inventory, but it also shows cyclical nature of listing activity:
