Something is amiss. CoreLogic®, which tracks virtually 90 percent of all mortgages and the circumstances of those houses, said that the shadow inventory is in its words: ”persistent” at 1.6 million homes that are delinquent or in some part of the foreclosure process – about 6 months supply. This doesn’t include the estimated 3 million properties that are on the market that are seriously delinquent, in foreclosure or in REO.
Where is the shadow inventory the largest? Combined, California, Florida, Illinois already represent about one third of all shadow inventory. If you add that of New York, Texas and New Jersey, you get to fifty percent. However, according to CoreLogic, “In some hard-hit markets, the demand for REO and distressed property is now over-stripping supply.” It’s not only REO and distressed, it’s all property.
Where? Arizona, and in particular Phoenix, a hard hit area that now appears to be an owner-occupied buyer’s nightmare. According to Andrew Waite, publisher of personal Real Estate Investor Magazine, there isn’t a lot of inventory to buy, and when there is inventory, it is being snatched out of the hands of people who want to live in these homes by investors with cash – even when the cash price is lower than the price that will require a mortgage. Mortgages are hard to come by these days; evidently, cash is not.
The issue with paltry inventory is not limited to the distressed states. The heretofore pattern of buy-sell-trade up has been shut down by tougher lending standards making it really difficult for first time buyers to get loans to buy their first property. This, of course, makes it challenging for the move up buyers who would sell to these first time buyers move on up. In addition, sellers unwilling to sell at today’s very low prices limit both housing supply and impede the important move up buyer market.
With all the distressed housing and all the plans to help people who have been displaced, caused to be underwater, etc., it’s an unexpected thing that in so many places you are hearing the refrain: “Where’s the inventory?”
by Tracy Velt