Hidden In the Shadows
Do you ever wake up in the middle of the night and have a moment of fright seeing something in the shadows?
Like anything in the shadows, it’s hard to tell if it’s going to be a scary monster or simply your jacket thrown over a chair that only makes you afraid until the lights go on. But in those moments until you know for sure, the fear is palpable.
There are approximately 3.5 million homes for sale in the U.S. There are almost as many homes that are either owned by banks because of foreclosure, abandoned by their owners but not yet foreclosed, or occupied by owners who have simply stopped paying and are waiting for the bank to knock on their door.
It’s these homes that aren’t yet for sale – ones that are often worth half their original value or less – that make up what’s referred to as a shadow inventory. And right now, what’s in the shadows has everybody pretty scared.
Everyone has been terribly frightened that banks were going to be required to put all of their properties on the market at once – flooding major markets with tons of inventory and lowering the prices. It was a scary proposition for many in the real estate industry when we have already experienced declining home values.
Our economy has been in bad shape. More than one out of three homes sold last year in central Ohio was a foreclosure or a short-sale property, according to The Columbus Dispatch. That’s enough to give anyone nightmares, and this shadow inventory certainly seems to have the possibility of making it worse. In the dark, all we can see is that if too many properties flood the market at the same time, it can create another – possibly even more extreme – real estate market crash.
Let’s turn on the lights, shall we?
In Closing –
In the light of day, we can see that either the rumors were not true or the banks were really not in a position to put up all the inventory as expected, so it’s not as bad as it might appear to be. Even better, new home builds and existing home sales are predicted to increase in 2012 because buyers aren’t interested in buying the distressed properties, and that new business will be good for the industry.
Scott Stevenson
