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November 22, 2010: Shadow Inventory Growing The so called “shadow inventory” of foreclosed homes (homes that have been repossessed by the banks but not put on the market for sale) has jumped 10 percent from last year; and now represent an eight month supply based on the current rate of home sales. According to CoreLogic, there were 2.1 million homes now in this “shadow inventory”, up from 1.9 million a year ago. If you were to add this shadow inventory to the present housing market supply it would boost supply to 6.3 million homes, which at the current rate of sales would take 23 months to go through. In response to this many banks are slowing the foreclosure process and not pushing out delinquent borrowers as quickly as before. Their reasoning for this is that it is better to allow borrowers to remain in their homes and do the maintenance and protect them from vandalism than it is to leave them vacant for long periods of time.
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