A new report issued by CoreLogic, based in Santa Ana., Calif., has determined that shadow inventory of residential property reached 2.1 million units, or eight months' worth of supply, as of August 2010 – an increase from 1.9 million, or a five-months' supply, from one year earlier. With visible inventory remaining flat at 4.2 million units, the change in shadow inventory increased the total supply of unsold inventory by 3%.
The total visible and shadow inventory was 6.3 million units in August 2010, according to CoreLogic – up from 6.1 million in the same period a year earlier. The total months' supply of unsold homes was 23 months in August 2010, up from 17 months in August 2009.
In its analysis, CoreLogic also found that the highest levels of distressed months' supply, which is the ratio of the number of properties that are 90-plus days or more delinquent to the number of sales, are in Florida, Michigan and California.
‘The weak demand for housing is significantly increasing the risk of further price declines in the housing market,’ says Mark Fleming, chief economist for CoreLogic. ‘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.’
CoreLogic estimates shadow inventory by calculating the number of properties that are seriously delinquent (90 days or more), in foreclosure and real estate owned by lenders and that are not currently listed on multiple listing services. Shadow inventory is typically not included in the official metrics of unsold inventory.