The inventory of bank owned homes not yet for sale that will eventually come on the market is commonly referred to as the “shadow inventory”. This encompasses properties already foreclosed on but not yet on the market for sale, houses currently in the foreclosure process, or possibly properties where the homeowners are at least 90 days delinquent on their mortgage payment.
Conventional wisdom dictates that as shadow inventory comes on the market, the total supply (inventory) of homes increases. But bank pundits have theorized that the increase of shadow inventory homes does not result in an increase in overall equity home listings, but rather an increase in distressed property listings (REOs, short sales, foreclosures) that will force the price of existing home listings downward, jeopardizing the recovery.
In reality, a real estate recovery seems to be in full swing, with rising prices and depleted inventories of both existing and new homes. In some areas prices have increased by as much as 20% and we are down to less than six months inventory. As a result, I have seen a slow but steady increase in the number of foreclosed homes popping up in our local MLS.
Now that Florida laws have been changed to help banks speed up the foreclosure process (right or wrong), the pace seems to be quickening. With pent up demand, rising prices, and a pool of institutional investors ready to snap up distressed properties, few doubt that the emergence of the shadow inventory will negatively affect the recovering real estate market in Stuart, Florida.
This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.