Shadow Inventory On the Decline...

The  “shadow inventory” of foreclosures—properties in the foreclosure process but not yet listed on multiple listings services—slowly sank over the past year but still amount to five months’ worth of home sales.

The numbers from an inventory last year of 1.9 trillion homes fell to 1.7 million in April, according to the latest report from CoreLogic. The decline is attributed to fewer new delinquencies over 90 days and a high level of distressed sales, which helped reduce the number of outstanding distressed loans.

Mark Fleming, chief economist for CoreLogic, commented, “The shadow inventory has declined by nearly one-fifth since it peaked in early 2010, in large part due to a reduced flow of newly delinquent loans in recent months. However, it will probably take several years for the shadow inventory to be absorbed given the long timelines in processing and completing foreclosures.”

Currently the shadow inventory accounts for 29 percent of the combined shadow and visible inventories.