Thanks.

Email me back if you’re interested.

Thanks for your comment.

I don’t deny that many lenders have had foreclosed properties on their books a long time but I do suggest that the huge shadow inventory of 1.7 to 7 million properties first forecast more than a year ago has yet to materialize–and may be a myth. Prices in most markets have stabilized but inventories are still falling. A year is a long time to sit on a foreclosed home without even putting in on the market. I don’t deny that some lenders may be doing so, and that they may have an impact locally, but the shadow inventory is starting to look a little like Chicken Little.

When it comes to inventories and their impact on prices, I think people ought to be more concerned about pendng supply than shadow inventory. Millions of owners have been waiting for prices to settle and move upward so that they can sell. One quarter of mortgage holders are still underwater, but the 30 percent of owners who have no mortgage and the 75 percent who are above water have been waiting 3 years for prices to improve. As they do, more and more homes wll come on the market and potentially dampen the recovery.

Yes. my data comes from NAR’s existing home sales, which is based on a survey of MLSs and does not include unlisted properties, whether short sales or FSBOs. The last numbers I saw on short sales (from Campbell Communications/Inside Mortgage Finance, not NAR) put them at about 15 percent of the distressed properties market. You’re right, they are increasing and their percentage of the distressed market rose about 5 percent last year, but they are less than ten percent of all sales and that’s not even close to the kind of numbers being bandied about by the shadow inventory folks.

In sum, I think that we both agree that there are delayed distress sales out there, whether intentional or not, but at the local level it’s hard to know the scale. Is it a thunderstorm or a hurricane? Nationally there’s no sign of a storm of any sort and as time passes, all signs suggest that there won’t be. But I could be wrong.

Steve