Huge stumbling block?
Just when we thought maybe we were bouncing at the bottom and about to jump back up in the real estate market, First American CoreLogic estimates that in September, there were 1.7 million shadow units not yet on the market, up 55% over September 2008. The pending supply of this shadow inventory is at 3.3 months, up 37.5% from last year.
In real estate, we know and have discussed that shadow inventories (pending homes withheld from the market by banks) would hold back economic recovery.
Ryan Hukill, Oklahoma Realtor said, “Personally, it’s tough for me to put a finger on the exact motivation behind the lenders holding back on foreclosures. On one hand, we could look at it as an indicator of their confidence that the country is rebounding, but on the other hand they’re already overwhelmed with the foreclosures they’ve processed and now have an inventory they can’t manage, so continuing to foreclose would only intensify the problem. There’s also the theory that it looks better on paper to have the delinquencies than the foreclosed assets.”
Hukill continued, “in my opinion, they’re just trying to curb an already monstrous problem – managing their inventory – by holding off on foreclosures, and hoping (not so much predicting) that at least some percentage of those home owners will find a way to get caught up.”
With stats flying around us like this, we have to ask- what will it take to stabilize the market? Are we already nearing stabilization? Are you optimistic or pessimistic about this news? Tell us in comments what youthink?
