The shadow inventory that previously darkened industry outlook is beginning to fade. In fact, we may soon begin to see the sunlight on the horizon.
In July shadow inventory – unlisted homes that are seriously delinquent, in foreclosure, or held as REOs – declined 10.2 percent year-over-year, falling to 2.3 million homes, according to CoreLogic’s Shadow Inventory Report released Tuesday.
“This is yet another hopeful sign that the housing market is slowly healing,” said Anand Nallathambi, president and CEO of CoreLogic.
Last July’s 2.6 million-home shadow inventory was eerily close to the level recorded two years prior in May 2009. Now, the heavy shadows are lifting.
The current shadow inventory is valued at $382 billion, down from $397 billion in July 2011.
The current shadow inventory equates to a six-month supply, according to CoreLogic.
The analytics firm also reports the rate of distressed sales taking homes out of the shadows is close to matching the rate of newly seriously delinquent homes falling into the shadows.
Seriously delinquent homes – those 90 or more days delinquent – are the most common type of home in today’s shadow inventory, making up 1 million of the 2.3 million-home total.
About 900,000 homes are currently in foreclosure, and another 345,000 are in REO.
Despite fading shadows nationally, some states continue to struggle with long foreclosure timelines.
“While a lower outflow of distressed sales helps alleviate downward home price pressure, long foreclosure timelines in some parts of the country causes these pools of shadow inventory to remain in limbo for an extended period of time,” said Mark Flemming, chief economist at CoreLogic.
Forty-five percent of the shadow inventory is concentrated in five states – Florida, California, Illinois, New York, and New Jersey.
By: Krista Franks Brock, DSNews