How much shadow inventory do we have?

So what is shadow inventory?

Shadow inventory refers to the housing supply that the banks have foreclosed on ( banked owned properties-REO’s) and are getting ready to foreclose on.  According to First American Core Logic, as of September 2009 there was a 1.7 million supply of these homes nationally, as compared to 1.1 million a year earlier.

The important thing to note about this statistic is that it includes properties that are at least 90 days delinquent and have not been foreclosed on, so technically we do not know exactly when the bank will foreclose and where these properties are.  This pending supply has been much talked about this year as many have been expecting a flood of homes to hit the market.

While it is true that this pending supply will impact our market, it will most likely happen over the next few years, not in a single event as some have been anticipating.   If that is how it plays out, the housing market will continue to stabilize and prices will remain level for some time, possibly increase in some areas.

Headlines of note include:

· Loan modifications rise 69 percent in third quarter-this is a significant rise and points to the possibility of less distressed properties going forward.

• Calif. median home price - October 09: $297,500 (Source: C.A.R.)
• Calif. highest median home price by C.A.R. region October 09: Santa Barbara So. Coast $970,000 (Source: C.A.R.)
• Calif. lowest median home price by C.A.R. region October 09: High Desert $118,580 (Source: C.A.R.)
• Calif. First-time Buyer Affordability Index - Third Quarter 2009: 64 percent (Source: C.A.R.)
• Mortgage rates - week ending 12/24/09 30-yr. fixed: 5.05 Fees/points: 0.7% 15-yr. fixed: 4.45% Fees/points: 0.6% 1-yr. adjustable: 4.38% Fees/points: 0.6% (Source: Freddie Mac)