That Shadow Inventory

October 2, 2012
In the past week I have heard interviews of financial professionals speaking about the real estate housing market. While they do finally concede that the real estate market has improved on a year over year basis, they seem always to want to being up the "shadow inventory".
In the beginning I thought that "shadow inventory" referred to the properties that had been foreclosed and that were now bank owned, but were not being offered for sale. When I checked out web sites that listed "bank owned" properties, I did not find a huge number of homes that were not listed for sale or already in escrow. Upon further inquiry, it seems as though what these experts are referring to are the properties that are worth less than the amount of the loans against them. Apparently they have available these loan to value statistics for all properties. They must believe that sooner or later these homeowners will stop making their mortgage payments, be foreclosed and will flood the inventory.
For at least two years, maybe three, we have heard about the shadow inventory that will cause the real estate market to give up any gains achieved so far. I have yet to hear a clear explanation of this position.
If you are a potential buyer of real estate, I would suggest that you not wait for the "shadow inventory" to arrive.