How Much Shadow Inventory Is There Anyway?

Do we really want to know just how many properties are considered “shadow inventory” ?

I’ve seen the shadow inventory figures quoted all over the place. What is the real number? I don’t think we will get an accurate figure by just looking at the distressed property sites a person can subscribe to for a fee.  And I don’t think you’ll here an accurate number quoted by the banks.  It’s not in the governments best interests to let the cat out of the bag. The highest number of  Option ARM’s are coming due for their first adjustments in 2010 thru 2011 time period.  Many of these loans will be unaffordable by the current owners  after these first adjustments if they aren’t already unaffordable before the adjustments.  Particularly in the higher price ranges,  you have a tremendous number of  individuals that had great incomes in the go go years but have been living on their credit lines for a while now and well,  it’s just a matter of time  before they run out of equity line.  I personally know of  homeowners  that have  been living in million dollar homes  and that have not made a payment in 20 months now yet, the banks have not set an auction date for the property. The banks do not want to foreclose on these large properties because they know that the  loses on these properties requires a huge write off  and larger reserve requirements by the regulators on these banks.  In addition, large properties come with high costs just to maintain them let alone getting them back in shape enabling the banks to liquidate them in a timely fashion.  On the positive side,  there doesn’t seem to be enough of these higher priced  bank owned properties (REO’s) coming to market for the current demand that is out  there . Because they are price aggressively, there is an appetite for them and they generally sell quickly and quiet often involve multiple offers.