Overall residential shadow inventory, as of July 2013, was 1.9 million homes, according to CoreLogic. That’s the lowest shadow inventory tally reported since August 2008.
The industry’s current shadow inventory carries a value of $293 billion by CoreLogic’s assessment, down from $380 billion in July 2012.
It represents 3.7 months’ of supply and accounts for 85 percent of the 2.2 million properties that were seriously delinquent, in foreclosure, or bank-owned at July month-end.
Of the fewer than 2 million properties in the shadow inventory, 874,000 properties were seriously delinquent (1.8 months’ supply), 661,000 were in some stage of foreclosure (1.3 months’ supply), and 318,000 were already in REO (0.6 months’ supply).
July’s count of homes lurking in the shadows was down 22 percent from a year earlier, when CoreLogic says shadow inventory stood at 2.4 million homes. Shadow inventory reached a peak of 3 million homes in 2010. As of July, it’s fallen 38 percent from that point.
“Over the past year, the value of the U.S. shadow inventory dropped by $87 billion-a sign of increased normalcy in the housing market,” said Anand Nallathambi, president and CEO of CoreLogic. “With a year-over-year decrease of 22 percent in July, the shadow inventory has now declined steadily for 10 consecutive months.”
CoreLogic estimates the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of properties that are seriously delinquent, in foreclosure, or held as REO by mortgage servicers but not currently listed on multiple listing services (MLSs).
Transition rates of “delinquency to foreclosure” and “foreclosure to REO” are used to identify the currently distressed unlisted properties most likely to become REO properties. Properties that are not yet delinquent but may become delinquent in the future are not included in CoreLogic’s estimate of the current shadow inventory.