WHAT IS SHADOW INVENTORY?

The chart above represents the balance of distressed loans

for total US markets -  excuse blurriness - had to blow it up to see it at all

bottom up: reo, foreclosures, 90-days delinquent, [unreadable]

MIT's Value of All Us Properties to Jan 2011 - down 50% since 2008

Shadow inventory represents homes that are in the foreclosure system but haven’t hit the market yet. Standard &Poor defines shadow inventory as foreclosure and REO properties in 90-day delinquency or worse and says that shadow inventories are slowing down market recovery.

The National Association of Realtors says that Standard & Poor estimates that there are 47 months of shadow inventory to work it’s way through the system.  1Q/2011 estimate was 52 months, so the number has gone down.

RealtyTrac, who tracks foreclosures, said that delays from mortgage servicers in processing foreclosures likely will cause more than 1 million foreclosures to be postponed until next year. This is a “Catch 22” because releasing many of these homes for sale will further drive down home prices.