Foreclosures and Shadow Inventory Keep Housing Supply High

Keeping An Eye On Inventory
Today’s Daily Wire picks up on a point touched on in yesterday’s edition. Housing inventory increased 7.3% in July, and supply swelled to nearly 4.1 million homes. Estimated by time, this is 9.4 months, which is far above the usual six months of inventory.

As usual, foreclosures have been a main contributor to the surplus. Nearly three quarters of a million homes had foreclosure initiations during the second quarter of 2009, and there should be around two million for the calendar year as a whole. Moratoriums earlier in the year have backlogged these from hitting the market until now and the near future.

Other foreclosures are being held in the wings by banks, creating a rather foreboding sense around the U.S.’s shadow inventory. Couple that with Zillow’s report earlier in the year that one third of all homeowners are at least a little interested in selling their homes once they feel the market is turning around for the better, and it is easy to see supply far outpacing demand, thus derailing a potential recovery. That said, it should be noted that the shadows are vague and sometimes more bluster than bite.

Uvestor Opportunity:
Ready or not, here they come. It is hard to imagine that reduced median home values, high unemployment and large numbers of underwater homeowners will not translate into opportunities for real estate investors. Quite the contrary, in fact, is the case.

There may well be a sluggish recovery already taking place; however, there are more foreclosures coming. Many cities are reporting fierce competition amongst bidders, and though that is not likely to change, the number of available properties should continue to increase.

Perhaps as important right now is that buyer confidence is fairly enthusiastic. For those who have not been able to unload properties in the past couple of years, there is still time to get in on the warm weather peak season. Don’t delay, though.