We have heard about the infamous ’Shadow Inventory’ that supposedly has lurked over our shoulders like a black cloud for 4 years now. The term ‘Shadow Inventory’ is used loosely to describe the backlog of bank owned properties that will eventually hit the market in some way, shape or form. Interestingly enough, no one will go on record about anything to do with ‘Shadow Inventory’ and we don’t even know if it really exists.
So, why am I discussing shadow inventory if we don’t even know it exists?
We do know that there is a backlog of Bank Owned (REO) properties that have not been liquidated. In judicial foreclosure states (Cal. is not a judicial foreclosure state), the MIRS or Robosign issue has been resolved to a point where many of those states will see and are seeing now, an influz of new inventory.
In California, we are the second hardest hit state with foreclosures. The key to any release of inventory was the recent settlement between the states and the major banks. this settlement resulted in states being awarded millions of dollars to paid by the banks for their part in the housing meltdown in which they failed to act responsibly by giving mortgages to unqualified buyers and causing the extended run-up of values of homes. This has now resulted in many homeowners being ‘underwater’ or owing more on their homes than what their home’s value is today.
At a conference with on Friday, June 17, 2012, I was fortunate enough to be able to get face to face with representatives of Chase, Freddie Mac, PMH Financial, NRTS, LPS and Wells Fargo. All are expecting a 40% increase in REO properties across the nation this year. this isn’t the tidal wave of ‘Shadow Inventory’, but it will add to the inventory and the effects of that will be discussed in my next post to come soon.
Stay tuned for more interesting tips and insights, what has happened to our inventory since January 1st and why this could be an opportune time to make your move in the real estate market.
Bye for now,
Dean Souza
Focused on the Success of Your Move
510 881 1761/510 888 3322
dsouza@deansouza.com
