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Shadow Inventory: not just a myth!

By Aida Pinto

Real Estate Broker/Owner with Independent Real Estate Broker DRE#00972295

July 21, 2009 08:56 AM

Or is it? Will it become the latest Urban Myth? Will this be the "big foot" of real estate? Lol! In my one of my previous post (http://activerain.com/blogsview/1159459/where-s-the-reo-listing-) I wrote about this subject but didn't get many comments. Maybe people don't understand what I am talking about, or maybe they just don't care.

For those who care, and don't know what the heck is "shadow inventory," here is a blog about this subject written by Jonathan Miller who is a co-founder and President/CEO of Miller Samuel, in his blog he gives a good definition of "shadow inventory!"

"...A developer [owner] does not usually offer up all available units for sale as a marketing technique to create urgency. This inventory type is comprised of units [properties] ready to be listed for sale but are withheld because of weak market conditions." Again: " inventory....ready to be listed for sale but are withheld because of weak market conditions"

If the banks are using "shadow inventory as a marketing technique, does anyone think that this might backfire on them? How long can they keep this "shadow inventory" off the market? Should we be adding, to the mix, the sellers/owners who want to sell but don't want to put their property on the market because they think values will go up in the near future? Does this "shadow inventory really exists? I think it does.

What are your thoughts on this or do you even care?

Here are some other blogs that fellow active rain associates have written about this topic. I guess it might not be real since I only found 10 blogs and one of them was my previous one! Lol!

This is the first one that comes up

This one doesn't really dive in to ‘shadow inventory but it's interesting!

This one talks about the California' mess

This one is good, how true it is-who knows?

Anyway, if you want to read more blogs about this subject-you, know what to do! (Hope the links work--I'm a little rusty, been away for awhile.)

What are your thought about this or do you even care or know what I am talking about?

Aida Pinto

Real Estate Broker

Realtor since 1987

(562) 916-3237

Websites: www.ShortSaleDiva.org or www.ReoLicensedSpecialist.com

Blogs: Short Sale Diva' s on Blogger.com; Active Rain Blog; Short Sale Diva Face Book Fan Page; Pinto Realty Face Book Fan Page

Disclaimer: This is not legal or tax or advise and this is solely for informational purposes, please consult with an attorney for legal matters or your tax accountant. All information contained in this blog is current and careful attention to accuracies is taken but not guaranteed. © 2009

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Robert Havana

Park and Protect- Alberta Real Estate License Parking - Calgary, AB

Alberta Real Estate License Parking

I am one of those who believe that the banks have kept 80% of the inventory back and some of it even off the books in an attempt to not allow themselves to look as foolish as they are. I think there is a ton of vacant inventory that will slowly trickle out as fast as the market can absorb it.

Jul 21, 2009 09:02 AM

Julie A. Black

KAUAI DREAMS REALTY Kauai Real Property Specialist - Kapaa, HI

CLHMS, CRS, GRI, Realtor, Broker

I don't think the Banks are holding bank inventory in my area on purpose, rather some mortgage companies are still so disorganized they don't know what they have in inventory. Also I have seen a few foreclosures not done properly, so the lender has to foreclose again. However in an area that is inundated with REOs I see this as a market strategy.

Jul 21, 2009 04:47 PM

Johnny Burke

Keller Williams Realty - Los Angeles, CA

Amidst recent articles citing "declining inventory", and "signs of market stabilizing", the shadow inventory lurks like a dark cloud. While some folks may be confused, there are those of us "waiting for the other shoe to fall" as it were.

Jul 22, 2009 02:57 AM

Cameron Wilson

Labrum Real Estate - Murrieta, CA

The Short Guy - Murrieta,Temecula,Menifee Californ

The shadow inventory exsists as far as I can tell. The banks are releasing the REOs at a slow pace as they know we have more buyers for them than properties and they will get multiple offers and a higher sales price.

Jul 22, 2009 12:43 PM

Independent Real Estate Broker - Los Angeles, CA

Real Estate Broker (562) 884-6196

Great comments. Thanks all!

Johnny: "Amidst recent articles citing "declining inventory", and "signs of market stabilizing", the shadow inventory lurks like a dark cloud. While some folks may be confused, there are those of us "waiting for the other shoe to fall" as it were."

Double ditto!

Jul 23, 2009 05:22 PM

Thanks Aida- appreciate your posts on this topic. Like the rest of us, I am trying to figure out how our market will absorb the inventory not yet listed, as well as the next wave of Alt-A/Prime resets due in the next 3 years. It seems like lots of people are calling the bottom of the market, i.e "prices stabilizing", "market is on fire", etc. I think this might be a bit premature.

Aug 01, 2009 11:37 AM

Shadow Inventory: not just a myth!

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