What is the "Shadow Inventory"?
You've probably heard the term
SHADOW INVENTORY lately regarding the foreclosure problem in the US. What exactly is meant by the term and how does it affect the real estate market?
Shadow Inventory is the number of homes that are in some state of foreclosure and not yet on the market, simply stated. With the unprecedented number of foreclosures and the overall housing market collapse during the subprime 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.
As a complication, several banks and several state governments (Maryland was one of them) put a moratorium on the foreclosure process, remember the robo-signing debacle? All this accomplished was to cause a back-up of foreclosures.
Maryland currently has about a 24 to 30 month inventory of homes in some state of foreclosure, not yet on the market.
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.
Foreclosures in Maryland:
Foreclosures in Frederick County:
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The Highland Group
Chris & Karen Highland * 301-831-9947
Turning Point Real Estate – 301-831-8232
email us: isell4u2@msn.com
Text Us: 301-401-5119