There are a large number of homes that are poised to be added to the already massive supply of homes on the market. CNN Money has dubbed these homes the “shadow inventory” because they represent the homes that were reposed by lenders within the past year. After the slow repossession process, banks are now bringing these foreclosures back to the market.
The “shadow inventory” is not nearly as ominous as it sounds. This is an amazing opportunity to buy. This undocumented portion of the market jumped 10% during the past year. There are 2.1 million homes nationally that are ready to be released from this private inventory.
Basic economics tells us that this huge supply gives buyers an incredible amount of power. Home prices are set to slide another 8% in the coming months, partly because of this new inventory. It looks like Christmas has come a tad early this year.
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