Shadow Inventory Threatens Housing Recovery
Santa Ana, California-based mortgage researcher CoreLogic issued a report this week saying that the glut of distressed properties in the US not on the market represents a nine month supply at the current sales pace. And that's in addition to the 3.49 million homes already on the market. The massive shadow inventory, the firm said, threatens to prolong the nation's housing slump already battling with weak job growth and slumping demand.
CoreLogic said there were 1.8 million properties in this so-called shadow inventory at the end of January. While that is a decrease from 2 million properties the year before, it still represents a total that wold take nine months to sell because the pace of sales has slowed this year after federal homebuyer tax credits expired.
Most housing analysts agree that there has been improvement in the market, but the looming shadow inventory will continue to apply downward pressure to prices for some time. The beleaguered housing market increasingly appears headed for a double dip, and the significant oversupply of homes could hinder the long-term recovery. Home prices are still barely above lows reached during the recession, according to the latest S&P/Case-Shiller index of home prices, released earlier this week.
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