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The Shadow Inventory is Disappearing

Real Estate Agent with The DiGiorgio Group

June 30, 2013 02:35 AM

Good News: The shadow inventory is disappearing in Denver-Boulder, Colorado.

I'm not sure if a 'shadow inventory' really exists at all in Denver - Boulder real estate, certainly would be a foolish thing for banks to hold on to properties if they have one they could sell in Arvada! foreclosures, shadow inventory, sellers market, arvada homes, denver boulder real estate

The shadow inventory - the 'unseen danger' that many of us refused to worry about, because it was basically a disaster based on definition then hyped by the media - was supposed to be millions of homes that the banks were holding on to, and which they could release any time. This was based largely on inaccurate reporting of foreclosure rates. (For instance, homes that had the foreclosure process started on them, but never completed, were included in the foreclosure rates).

This 'news flash' is old news now: "CoreLogic is also reporting a decline in completed foreclosures, and says February was the lowest level of foreclosures since 2007".

It's funny - I actually started this post a few months ago and have just now gone back to finish it. This summer inventories in my market have been so low, it's extremely difficult for people to get a house in the below-$250K price range. And prices have been shooting up, faster than anyone would have predicted they could.

And still, the myth about the 'shadow inventory' that the banks are holding onto, and which they will release soon (always 'the end of next month'), persists. But in years past, it was a dire warning about the market being flooded with homes that need a lot of work and now it's talked of with hope that there will be more homes to choose from, regardless of condition.

My, how things can change quickly in real estate!

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Carol Zingone

Berkshire Hathaway Home Services Florida Network Realty - Jacksonville Beach, FL

Global Realtor in Jax Beach, FL - ABR, CRS, CIPS

We must be quite adept to see market changes.

Jun 30, 2013 03:29 AM

Sandy Padula and Norm Padula, JD, GRI

HomeSmart Realty West & Lend Smart Mortgage, Llc. - Carlsbad, CA

Presence, Persistence & Perseverance

Joetta, the banks are selling off their shadow inventory to the likes of Blackrock and Colonial in lots, and the general market never sees these opportunities. In Sarasota County, the foreclosure filings were up 16% over last YTD. So you can't make a statement with a broad brush. Foreclosures and shadow inventories are being treated on a regional basis by the mortgage lenders.

Jun 30, 2013 04:33 AM

Joetta Fort

The DiGiorgio Group - Arvada, CO

Independent Broker, Homes Denver to Boulder

Norman - I had put in the second sentence that this post was about my local market in Denver to Boulder, CO. I changed it to the first sentence for clarity.

Anyway if the banks are 'selling off their shadow inventory', it must be decreasing, right? So whether it's decreasing due to fewer foreclosures (which is the case in my local market), or because the banks are selling them off in lots, there's a good chance that it's decreasing everywhere, right? That's what was reported by CoreLogic.

It's just interesting to me that whatever is reported in the media is so fully believed by people, and even though it's not true in my local market still the rumors persist and buyers keep holding out, waiting for the 'big release'.

Jun 30, 2013 05:59 AM

Joetta, as usual, the prospects out there, be they sellers, or buyers, will always need to be led to the final decision by us 'calculating' real estate agents to either buy or sell because typically, they are all behind the curve of reality. Thanks! And by the way, the shadow inventory in many markets, including mine is still a constant because the foreclosure actions are climbing again, since the banks have put the robo-signing debacle behind them.

Jun 30, 2013 12:28 PM

I'm sorry to hear foreclosures are climbing in your area, Norman. I really feel for you. It's been a long downturn for the entire nation, but Colorado was #1 in foreclosures before the rest of the country was feeling the pain. There are a lot of people who believe that Colorado is a kind of 'leading indicator' for what will happen in the rest of the country - I hope it is, since things are going well here.

Keep up the good work, Norman.

Jul 01, 2013 01:58 AM

The Shadow Inventory is Disappearing

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