Home Buying in Sacramento>Question Details

Rqf, Other/Just Looking in Sacramento, CA

Shadow Inventory

Asked by Rqf, Sacramento, CA Sun Aug 21, 2011

I've been reading a lot about "shadow inventory" in the newspaper. Is there really that many homes that the banks are holding onto or foreclosed on? Just curious. Sometimes the newspaper only has the information partially correct.

Help the community by answering this question:


We don't know how many "that many" are, but some people have been spooked about this "shadow inventory" since like 2007 or so. Hey, ya never know!
1 vote Thank Flag Link Sun Aug 21, 2011
You are surrounded by shadow inventory from a variety of sources.

Several homes that have just been listed were foreclosed on in 2008.
Yes...3 years ago.

There are many others that have not had payments to the bank from the current owner
nor a notice of default issued by the bank to that owner. Missing paperwork prevents the
lender from foreclosing.

Inventory will continue to be added to the market in various stages.

As a buyer, you have picked a great time to locate your dream home. Interest rates are amazing, loans
are readily available to finance your home, and you have a great selection. Take advantage of the pricing
and selection.

As a seller, put your best foot forward and have your house sparkle. You will get the activity and results

Please let me know if you have additional questions.
I am always happy to help!

Michele Peterson
Keller Williams Realty
1 vote Thank Flag Link Sun Aug 21, 2011
This has been a big mystery for 3+ years! Seems to be many opinions, but no one has known, since every bank apparently lives in it's own state of confusion? Now we hear some have been and will increasingly sell them in blocks to investors or?? Probably at a discount? Another bank write off or loss, instead of helping the original home owning family?
0 votes Thank Flag Link Sat Oct 29, 2011
The Sacramento marketplace's inventory of homes for sale is down over 29% from last year! More inventory could create a more robust market.

See my recent post on this matter.
0 votes Thank Flag Link Mon Oct 17, 2011
We had a question a couple weeks ago, where the Inquisitive person quoted a very autorative source who said that there would be 10,600,000 foreclosures hit the market in the next six years!!


But; 10,600,000 divided by 6 equals 1,766,666 per year; almost exactly where we are now.

And, you so eloquently pointed out, that's across the whole entire Nation.

I am looking forward to it; simply because of the infusion of CASH this will mean to the economy.

I also agree with Morgan's comment about the competence and staffing levels at some Banks: I visualize a worker's desk piled 200 high with FILES. Can you see it?
0 votes Thank Flag Link Mon Aug 22, 2011
What it boils down to is "shadow inventory" is one part mystery and one part obvious. The mystery part is that no one really knows how many homes are still foreclosing and how many have already foreclosed and need to be brought on the market. It really varies from bank to bank how quickly they bring homes on the market. There is a home right down the street from me that foreclosed mid-July and has already been on the market 2+ weeks. Even I was surprised how quickly it was up for sale! And we've all heard stories of empty homes for months or years that never seem to make it on the market.

The obvious part is: how could banks keep up? People sometimes forget that banks are large, convoluted corporations that don't always have things as "together" as we'd like to believe. Which means, while they were learning the processes of short sales and high volume foreclosures, they got behind. It also could be strategic to not let all the inventory be for sale at the same time - they would then be competing against themselves.

One more note: Erin mentions 1.5 million homes of shadow inventory. Please remember that this is nationwide. It sounds like a large number, but when you think how many people live in this country, maybe the number doesn't seem that large after all? Plus, that number is just speculation.

Hope this helps. Happy buying :)
Web Reference: http://www.MorganLarson.com
0 votes Thank Flag Link Mon Aug 22, 2011
Hi RQF -- This is a great question. Thanks for asking it.

I have heard from very very experienced bank owned property listing agents in my office who now list HUD homes for sale say there are 1.5 million homes in shadow inventory in the U.S. right now. The lenders holding these homes are not releasing them on the market for the obvious reasons. One, the feds are paying them not to, two, they are selling them to other investors in bulk at greatly reduced prices so they can hold onto them until the market "improves." If you are buying now, great. If you NEED TO SELL right now, not so great. I believe the lenders are trying to move all of their in-default properties that are not yet bank owned (foreclosed on) through short sales right now.

I hope this helps.


Erin Phillips
Keller Williams Realty, Roseville
DRE # 01474901
Web Reference: http://SoldByErin.net
0 votes Thank Flag Link Mon Aug 22, 2011
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