Have you been hearing about the elusive shadow inventory?
Have you heard this term before?
Does a shadow inventory even really exist?
I decided to Google the phrase to see what would come up and one of the first link was to the website: www.investopedia.com. I guess we need a “pedia” for just about everything these days. Well here’s what investopedia had to say about “show inventory”:
Definition of ‘Shadow Inventory
A term that refers to real estate properties that are either in foreclosure and have not yet been sold or homes that owners are delaying putting on the market until prices improve. Shadow inventory can create uncertainty about the best time to sell (for owners) and when a local market can expect full recovery. Also, shadow inventory typically causes reported data on housing inventory to understate the actual number of inventory in the market.
Investopedia explains ‘Shadow Inventory
With the unprecedented number of foreclosures stemming from the subprime mortgage meltdown of 2007-2008 and the overall housing market collapse during that crisis, lenders were left with significant real estate holdings. Many lenders were slow to put their inventory up for sale for fear of flooding the market and further driving down prices, which would in turn lower their potential ROI.
So as funny as this term may be, I have come across many buyers, sellers, and owners that have made some sport of reference to this pending supply of distressed properties that will most likely have to hit the market at some point.
If you are concerned about how this could potentially affect your property value, or whether now is a good time to buy or sell, please call or email me for more specifics about this topic and how it pertains to either the property you own, or perhaps a property you wish to purchase.
Written by Eric Leach / 949-690-5555 / leacheric22@gmail.com
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