Posted at trustjay by Jay Redlin

Jan. 28, 2010

According to the latest CRS magazine, Certified Residential Specialist there will be "Shadow Inventory" in our future. Shadow inventory represents all the folks that tried to sell or were thinking about selling and didn't in this market. In the future when the market takes an up tick and all the banks finally release their toxic inventory, here will come the "Shadow Inventory" and we will be over loaded with a flood of inventory driving the values down again. SELL your present clients on the idea that waiting to sell when the market comes back may not be the best thing given the banks inventory and the shadow inventory waiting in the wings.

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1. RE: Shadow inventory to follow

Written by: mike payne

Jan. 29, 2010

Jay, you make a GREAT point!

Especially in Sarasota, Florida, think about NOT selling if you don't need to sell.

Unfortunately, most sellers today NEED to sell. Job losses in and around Sarasota continue suppressing PRICES. Naturally, our local MLS gets giddy about # of sales at the expense of continued price erosion.

Eventually, we WILL have to address SHADOW INVENTORY.

BTW: For those who aren't up to speed on all this realtor "lingo," shadow inventory includes properties (usually vacant) rotting away, perhaps in some state of foreclosure or bank-owned...but not listed. They're just sitting around!

I don't know Albuquerque's foreclosure situation, but in Florida we are besieged by foreclosure. All of Florida, it seems, is "underwater"

Quite frankly, SHADOW INVENTORY is both good and bad!

On one hand, the number of distressed properties hitting the market MUST be CONTROLLED. This is good.
BAD is what is happening to these properties. In my own "nice" neighborhood in Sarasota, Florida, we have SIX properties defined as "shadow"...in just one neighborhood!

In HOT, HUMID Florida, no a/c...no maintenance...no "preservation" or anti-vandalism. Once beautiful homes now feature MOLD....

In NM, you don't address mold, but in Florida mold is a death sentence for a property. What do you think will happen to property values as a result of "toxic" properties (rotting for months and years) hit an already stressed market...even months from now when market conditions improve?

How will valuation "experts" avoid comping these toxic properties?

Earlier, I mentioned ulterior motive. On one hand, dripping distressed properties onto the market HELPS control a fragile market.

On the other hand, we now are aware of players such as Michael Dell's buddies at OneWest (formerly IndyMac) & their own ulterior motive...and there's nothing good about GREED!

Unfortunately, I'm trying not to think about shadow inventory. Too many people losing jobs, homes & stability.

At least in Florida, we're many JOBS away from a stable housing market...with more ALT-A & commercial "distress" on the way. Alas, these are depressing topics for a rainy day.

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