Residential shadow inventory is on the decline, falling in July to 1.6 million units and representing a supply of five months, a new report from CoreLogic shows.
One year ago, nationwide shadow inventory stood at 1.9 million units, marking a six-month supply. Shadow inventory is 22 percent lower than the peak reached in January 2010 of 2 million units -- or 8.4 months of supply.
CoreLogic calculates shadow inventory by taking into account the number of distressed properties not yet listed on the multiple listing services that are more than 90 days delinquent, in foreclosure, and real estate owned by lenders.
"The steady improvement in the shadow inventory is a positive development for the housing market," says Mark Fleming, chief economist for CoreLogic...
Source: HousingWire (Sept. 27, 2011)
Jay's Notes: BofA just escalated a bunch of Foreclosure Notices and Notices of Default last month in an effort to clear out their backlog. If indeed banks are going to tackle their foreclosure backlog in the next six months, it may create the buying window for investors. Rates just dropped to a 60-year low creating cash flows that were unattainable previously. Investors may see cash-on-cash returns go from 10% to as high as 20% because of these low rates combined with prices associated with banks clearing out their backlogs.