Shadow Housing Inventory Continues to Fall, Down 12.3 Percent in Oct

by Peter Thomas Ricci

January 04, 2013

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Shadow housing inventory continued to decline in October, falling 12.3 percent from the year before.

So far, news for 2013 is optimistic: shadow housing inventory continued to decline in the autumn months, falling by 12.3 percent year-over-year in October, according to the latest estimates from CoreLogic.

In total, there were 2.3 million units in the shadow housing inventory in October, which CoreLogic counts as properties that are either seriously delinquent, in some stage of foreclosure or REO.

Shadow Housing Inventory Declines – Part of Larger Narrative

The declines in the shadow housing inventory are part of a larger narrative for housing inventory, one that has seen the supply of homes grow healthier and healthier with each passing month. Lest we forget, housing inventory ballooned to stratospheric levels following the overbuilding of the housing boom years, but now, both new home and existing-home inventories are back to healthy levels, with existing-home inventory now at a 4.8-month supply and new home inventory at a 4.7-month supply. And of course, the healthier housing inventory levels are, the healthier the housing market will be.

Other highlights from CoreLogic’s report included:

At 2.3 million units, shadow housing inventory is currently at a seven months’ supply.
Of those 2.3 million, 1.04 million units are seriously delinquent (3.3 months’ supply), 903,000 are in some stage of foreclosure (2.8 months’ supply) and 354,000 are already in REO (1.1 months’ supply).
As of October 2012, the dollar volume of the shadow housing inventory was $376 billion, down from $399 billion a year ago.
And finally, Florida, California, Illinois, New York and New Jersey make up 51.3 percent of the shadow housing inventory; California is the only one of those states that follows nonjudicial foreclosure proceedings.

Mark Fleming – Shadow Inventory “Little Immediate Threat”

Mark Fleming, the chief economist for CoreLogic, added an interesting observation regarding the shadow housing inventory – because the majority of the properties are delinquent, and because the majority of those properties are in judicial states (where foreclosure proceedings take notoriously long to resolve), the shadow housing inventory poses little threat to the housing recovery.

“Given the long foreclosure timelines in many states, the current shadow inventory stock represents little immediate threat to a significant swing in housing market supply,” Fleming said. “Investor demand will help to absorb the already foreclosed and REO properties in the shadow inventory in 2013.”