Will The Shadow Inventory Hurt The Recovering Real Estate Market?

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Shadow Inventory

As a top Bend Oregon Realtor who follows the status of the housing market on a daily basis one common buzz word that I see mentioned regularly is shadow inventory.

Shadow Inventory Defined

What exactly is shadow inventory?

These are homes that have underwater mortgages which are at least 90 days or more delinquent and the lender feels will ultimately end up becoming a short sale or foreclosure.

Could shadow inventory be holding back the economic recovery?

The answer to this question depends on who you ask but when you realize that there is a lack of home inventory in Bend and across the United States plus a general slump in homes being built it’s easy to see how that shadow inventory is hurting the economy because, those homes are many times sitting idle when they could be sold and have new owners who pay their mortgages and property taxes.

The Changing Face of the Real Estate Market

What’s great about the 2014 Real Estate Market is that shadow inventory has been dramatically reduced from last year.

In January 2013 there were 3 million homes that could be considered shadow inventory while in January 2014 there were only 1.7 homes that can considered shadow inventory.

What’s Behind The Sluggish Housing Market?

Recent statistics from CoreLogic also show that home sales and purchase applications also declined in March of this year compared to the same time in 2013.

Many top Realtors and economists who follow Shadow Inventory feel that it’s not just factors like shadow inventory that are causing the Real Estate market to be “sluggish”.

Right now one of the chief reasons behind the sluggish Real Estate market is the fact that many home buyers are not purchasing homes right now because, they don’t want to buy homes that are already obsolete and have characteristics that are not desirable any longer.

This trend can also be called “shadow demand” because, instead of purchasing homes for sale that could be rehabilitated more home buyers are waiting longer for new homes to come to market and once the new inventory does become available those homes will go quickly

Staying Right Where They Are

Last of all, but most important, another reason that we can attribute the sluggish Real Estate market to is the large amount of rate-disenfranchised sellers out there or owners who already have awesome mortgage interest rates locked in and they have no motivation to sell their homes.

Right now many major publications including Mortgage News Daily show that the actual rate of disenfranchised sellers could be as high as 3.57 million or higher so the coming months will certainly be interesting considering all of the factors that the Real Estate market has to deal with in 2014.

Although the 2014 Real Estate market may have it’s challenges right now there’s a general sense of optimism in the air because, it’s still a great time to buy or sell a home since mortgage interest rates are still low and there is a high demand for homes across the United States.

For all of your Real Estate needs contact me today by calling (541) 383-1426 or click here to contact me online.

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