Shadow Housing Inventory Down 10.2 Percent in New CoreLogic Report

by Peter Thomas Ricci

October 10, 2012

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For months, analysts feared the shadow housing inventory would cause fright in the market, but new data from CoreLogic is showing continued declines of its housing stock.

by Peter Ricci

Residential shadow housing inventory declined 10.2 percent year-over-year in July in CoreLogic’s latest survey of the market, as the housing market’s inventory levels continued to improve.

Bearing no signs of the frightful predictions that many analysts had initially feared, the shadow housing inventory has fallen from 2.6 million in July 2011 to 2.3 million units, a six-month supply, in July 2012, which brings the inventory down to the same levels of March 2009.

Shadow Housing Inventory – Dropping Steadily

The flow of distressed properties through the real estate process, CoreLogic noted, has been essential to decreasing the supply of shadow market properties; though there are still seriously delinquent properties, they have been offset by an equal volume of distressed property sales via short sales and REO transactions.

Other details in CoreLogic’s report included:

Of the 2.3 million shadow inventory properties, one million are seriously delinquent, 900,000 are in foreclosure and 345,000 are REO.
The dollar volume of the shadow inventory was $382 billion in July, down from $385 billion in June and $397 billion in July 2011.
As of July, distressed properties in Florida, California, Illinois, New York and New Jersey account for 45 percent of distressed property inventory in the U.S.

CoreLogic’s Nallathambi – “Hopeful Sign”

The consistent declines of the shadow housing inventory, said CoreLogic CEO Anand Nallathambi, is a promising sign for housing’s recovery.

“Broadly speaking, the shadow inventory continued to shrink in July,” Nallathambi said. “The reduction is being driven by a variety of resolution approaches. This is yet another hopeful sign that the housing market is slowly healing.”

CoreLogic calculates its shadow housing inventory numbers by tracking the number of properties that are seriously delinquent, in foreclosure and in REO status, and though the shadow markets were feared as an inhibitor to the housing recovery, by all measures (including competing calculations by Morgan Stanley and JPMorgan Chase), its inventory is declining steadily.