You've heard the speculation, you've read the blogs, how large is the looming shadow inventory?
As a broker and property manager, who has recently become one of the go to guys for REO, I can tell you the looming threat is ominous!
I am managing hundreds of REO investment properties for lenders who are reluctant to put them on the market, I am doing BPO's for lenders who are moving toward foreclosure on multiple commercial properties.
Lenders are holding back inventory because the market is soft and they do not want to flood the market with more toxic assets. From my experience these toxic shadow assets are mostly inner city investment property. Investors who went belly-up trying to buy and flip, got caught with an inventory that outweighed their net worth.
While I am seeing an increase in suburban foreclosure rates, the vast majority of REO's are in working class neighborhoods and neighborhoods with higher non-owner occupied properties.
The increasing rate of commercial foreclosure is a real concern, as the residential market is already in the toilet, the commercial real estate market is just beginning to dump.
Areas of affluence are now seeing vacancy increases and major anchor stores are leaving the big malls. Where will all this end?
Only the shadow knows!