Only the Shadow Knows

Following is an article about the homes that banks own but are not selling. In short the “experts” predict that it will take over 4 years to clear out the “shadow inventory”.

Shadow inventory estimated to take four or more years to clear
Although the volume of distressed non-agency residential mortgage properties in the U.S. continues to decline, the pace of moving distressed properties through the foreclosure process continues to slow, according to Standard & Poor’s Ratings Services.  S&P currently estimates that the principal balance of these distressed homes amounts to about $450 billion, representing nearly one-third of the non-agency residential mortgage-backed securities market.  This shadow inventory of distressed properties is defined as outstanding properties whose borrowers are (or recently were) 90 days or more delinquent on their mortgage payments, properties currently or recently in foreclosure, or properties that are real estate owned.

At the end of fourth-quarter 2010, S&P estimated it will take 49 months, or more than four years, to clear the supply of distressed homes on the market in the U.S. as a whole. This is an 11 percent increase over the previous quarter and a 40 percent increase from fourth quarter 2009 for the average time to clear these properties in the U.S.

About Stephen Davis

We have been actively involved in Real Estate in California since purchasing 55 acres in 1975. We subdivided the land, built a house on one parcel and sold the others. We have subdivided other properties, owned two Real Estate companies, lead monthly seminars in Real Estate Investing, and sold hundreds of homes and mobile homes over the years.
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