There have been several recent articles in the media predicting that shadow housing inventory is no longer a threat; so does this mean we are running out of real estate investing deals?
Data compilers claimed that shadow inventory levels fell around 15% year-over-year as of April 2012 but that doesn’t mean there aren’t a significant number of distressed properties lurking out there. In fact CoreLogic put a modest figure of $246 billion on this inventory which is a lot by any calculations and it is believed that as much as 90% of REOs are being held off the market. Plus, we have to remember that about half of all U.S. homeowners are still underwater.
What is scary is the government being completely clueless about this inventory or trying to cover it up to restore confidence. How is it that a plethora of analysts and data companies can see it yet Shaun Donovan, secretary of Housing and Urban Development recently said “It’s hard to see where these properties are hiding,”?
Yes, home sales and prices are picking up as are home values and half of all foreclosures seem to be being resolved early with half of all distressed property sales in July 2012 being short sales but there is more inventory out there to come. Fortunately much of it also seems destined to become rentals and not to be resold on the market for decades.
So yes, we are in a recovery and yes there is lots of shadow inventory so the truth lays somewhere in the middle of sensational media reports in that there are plenty of discounted deals to still come on the market over the next 2-5 years but it is very unlikely to hurt the market.
For newer real estate investors this means plenty more deals to be found around the country which can be flipped or turned into long term rentals. Plus, many seem to be forgetting that only a couple of years ago they were whining about the bubble bursting. Even in those peak years when it was undoubtedly a seller’s market and nothing was selling for under asking price investors were making $50,000, $70,000 and even $100k on flipping homes in a day and many were flipping 5 or 10 a month.
For those finding themselves running short on leads CT homes has plenty of real estate investing deals on tap; contact us and find out how we can help…
