Bank sees huge “shadow inventory” of foreclosed houses
An update to my earlier post about inventory issues, which briefly discussed the concept of “shadow inventory.” In that post, I wrote of “a theory floating around various blogs that listed inventory is deceptive because banks and lenders are quietly sitting on large and growing piles of foreclosed houses — so-called shadow inventory.”
It’s a bit more than a theory floating around a few blogs, as Sacramento Real Estate Statistics reports in this excellent post, which quotes extensively from a Deutsche Bank report on the subject of shadow inventory. Highlights of the Deutsche Bank report:
“MLS listings are missing large amounts of distressed inventory
… Based on our analysis, MLS based listing inventory is significantly understating the extent of foreclosure inventory in many markets.”
The Deutsche Bank report is the source of a shocking number you may have seen in the comment section. Based on the bank’s research and estimates, the inventory of foreclosed homes in Greater Los Angeles stands at 88,843 units; that is far higher than the entire MLS-listed inventory for the metro area, 62,379. The bank’s estimates are based on various sources that include pre-foreclosure filings as tabulated by RealtyTrac. My analysis is that it is likely the 88,843 estimate is higher than the actual number of foreclosed houses in Los Angeles, but it still a staggeringly high estimate.
–Peter Viles
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Hat tip: Patrick.net
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