Shadow Inventory Experiences 10 Percent Year-over-Year Increase

Santa Ana, Calif.–Residential shadow inventory, or pending supply, rose 10 percent from August 2009 to August 2010, according to new statistics released by property information services provider CoreLogic. The notable increase boosts shadow inventory–properties with mortgages that are at least 90 days delinquent, properties in foreclosure, and real estate owned by lenders–from 1.9 million units to 2.1 million units, or a five-months’ supply to an eight-months’ supply.

Looking specifically at those homes with mortgages that are delinquent 90 days or more–the group of properties is also referred to as distressed supply–there are major geographical discrepancies. As per CoreLogic’s conclusions, Maryland, New Jersey and Illinois top the list of states in the contiguous U.S. with the highest levels of distressed months’ supply, or the ratio of number of delinquent distressed properties to the number of sales; the figures are 24.4, 24.1 and 23, respectively. Texas fared the best, with a distressed months’ supply of just 5.5.

Twelve months didn’t change everything, however. CoreLogic’s research reveals that the visible supply of unsold inventory held steady at 4.2 million from August 2009 to August 2010.

Regardless, the housing market clearly has not made a full recovery. “The weak demand for housing is significantly increasing the risk of further price declines in the housing market,” Mark Fleming, chief economist for CoreLogic, noted in a prepared statement. “This is being exacerbated by a significant and growing shadow inventory that is likely to persist for some time due to the highly extended time-to-liquidation that servicers are currently experiencing.”