Shadow Inventory Joins Biggest Losers

Written by: Steve Cook   Tue, September 27, 2011 Beyond Today's News, Crisis Watch, Foreclosure Situation

The so-called shadow inventory of foreclosures-properties that are seriously delinquent by not yet listed on multiple listing services for resale-is shrinking faster than a Weight Watchers spokesperson.

CoreLogic reported today that the current residential shadow inventory as of July is now 22 percent lower than its 18 months ago in January 2010.

In July the shadow inventory declined to 1.6 million units, representing a supply of 5 months, down from 1.9 million units, a supply of 6 months, from a year ago.  The moderate decline in shadow inventory is being driven by a slower pace of new delinquencies.


  • The shadow inventory of residential properties as of July 2011 fell to 1.6 million units, or 5 months’ worth of supply, down from 1.9 million units, or a 6-months’ supply, as compared to July 2010.
  • Of the 1.6 million properties currently in the shadow inventory, 770,000 units are seriously delinquent (2.2-months’ supply), 430,000 are in some stage of foreclosure (1.2-months’ supply) and 390,000 are already in REO (1.1-months’ supply).
  • As of July 2011 the shadow inventory is 22 percent lower than the peak in January 2010 at 2 million units, 8.4-months’ supply.
  • The total shadow and visible inventory was 5.4 million units in July 2011, down from 6.1 million units a year ago. The shadow inventory accounts for 29 percent of the combined shadow and visible inventories.
  • The aggregate current mortgage debt outstanding of the shadow inventory was $336 billion in July 2011, down 18 percent from $411 billion a year ago.

Mark Fleming, chief economist for CoreLogic, commented, “The steady improvement in the shadow inventory is a positive development for the housing market. However, continued price declines, high levels of negative equity and a sluggish labor market will keep the shadow supply elevated for an extended period of time.”

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