I’ve been one of the panicked voice in the Shadow Inventory debate. Comparing default filings to actual defaults, specifically NOSs to TDs and the Foreclosure Sales stats posted by the Center For Regional Studies, shows anywhere from 6000-12,000 properties in shadow limbo.
We all have a house on the corner that has been foreclosed on and then inexplicably just sits there. But those are the exceptions. From my research, the banks are generally pretty efficient about listing and reselling their holdings after they go REO.
So what subtracts from the perceived shadow inventory? A couple of things. Short sales that have received any level of foreclosure filings are not debited out of the equation. Either are proprieties taken back by the banks in a DIL (deed in lieu of foreclosure). There is really no way to quantify how these elements have affected what we have assumed to be shadow inventory.
TOB (That Other Blog) has been on fuego lately with reports of lack of inventory, and the assumption has been that the banks have an unending backlog to feed into the market. But maybe this isn’t so. Maybe the banks are only holding on to 1000 REO properties, not 10,000, Sure, AB 284 is currently building the backlog in the shadows, but I’m beginning to seriously question how much backlog really exists.
Crazy talk while waiting for the on-sale-post St. Pat’s Day corned beef to cook, or is there something to this? If the shadow inventory has been in the sunlight all along, do you feel better about the Reno market?