In November, I wrote a cover story for The Memphis News about the city’s estimated amount of “shadow inventory,” or backlog of properties that are 90 days or more delinquent, in foreclosure or bank owned but haven’t yet hit the market.
At that time, shadow was estimated at about 7 million properties nationally and 3,200 locally. Experts are now predicting that number will continue to drop as the economy improves.
The U.S. had 1.8 million distressed homes in January that had yet to be listed for sale – that’s down slightly from 2 million homes in January 2010, market researcher CoreLogic reported Wednesday.
The states with the highest shadow inventory are New Jersey, Illinois and Maryland, where it’s estimated it will take 21 months (nearly 2 years) to sell the pending supply.
While Shelby County’s consistently high foreclosure rate caused the area to never endure the bubble that other cities did, shadow inventory will likely grow by 100 to 150 units per quarter due to fewer takers of foreclosed inventory, said Corky Neale director of research for RISE.
And despite the slowly improving shadow trend, the current level and distressed months’ supply remain very high, said Mark Fleming, CoreLogic chief economist.
“The short-term weakness in prices and longer-term weakness in the drivers that affect the housing market imply that excess supply will remain high for an extended period of time,” he said.