Shadow Supply Of Real Estate May Push Back Housing Revival

Investor's Business Daily (06/06/08) P. A1; Gose, Joe
A so-called shadow inventory of real and potential homes for sale will likely delay a housing rebound longer than hoped. Bank-owned properties, distressed borrowers who are still in their homes and owners who want to sell but are waiting for the market to improve are all contributing to this shadow supply. Officially, the National Association of Realtors reports that 4.55 million existing homes were on the selling block in April, adding that it would take 11.2 months to clear that inventory at current sales pace. However, official data does not take into account the record 2.47 percent of all home loans that were in foreclosure at the end of the first quarter or the 6.35 percent of all loans on one-to-four-unit residential properties that are behind on payments or the nearly 25 percent of subprime adjustable-rate loans that are seriously delinquent. An influx of homes from this shadow supply could make inventory a major problem--an influx that may be in the early stages as banks have become bogged down with repossessed properties.