Mike, thanks for your comments. I'm not sure I've heard of pocket listings. What is that?
Tom:
Thanks for your post. The shadow inventory has a lot of people here in the Washington D.C. metro area concerned. The residential market picked up this summer and fall but could be adversely affected if too many bank-owned properties came on the market too soon.
Richard,
The continual stream of foreclosures is unfortunate, however until the inventory is depleted, it is going to affect "normal sales". I think people all over the country are worried. Thanks for your comments.
Since the market is based upon supply and demand, the "shadow inventory" will have an effect on some markets for many years to come.
I have noticed a trend in the silicon valley, especially in the higher end areas with fewer distressed sles, that the banks are not selling at that much of a discount, and not approving short sales much under retail value if at all. While it drives listing agents crazy, it is probably better for the home values in the long run.
A key factor with the "shadow inventory" in my market area is condition. Prior to the big downfall, foreclosure homes were generally rare and in poor to fair condition with repairs necessary. When the volume increased a couple years ago, this trend continued. At that point, they could not be considered part of the typical market since they could not be financed through the secondary market due to needed repairs which require cash reserves by investors to make necessary repairs. So the market became divided further into an investor market which purchased most foreclosures and an owner-occupied, traditional buyers market which bought homes financing-ready with no repairs. Over the past year or two, more "strategic" default homes seem to be entering the market which are well maintained, requiring no repairs, and sell for a slight discount rather than the deep discount of the former REO sales.
Jesse- You are right. As the WSJ suggests it could be years.
Marcy- I would think it would be better for the market if they were not sold at a discount. When they are that just brings the other ones down.
Richard- I have been finding the same thing regarding condition. Some of the foreclosures are nicer than the normal sales.
Hi Tom, I agree.....shadow inventory is ominous stuff for all of us. You've done a nice job of explaining why foreclosures are considered as comps.
How about pocket listings? I'm finding myself with a good supply of these lately too.