Sarasota Shadow Inventory
CoreLogic releases a US Shadow Inventory report at the end of each quarter. The release usually sets off a series of articles on shadow inventory and how the presence of shadow inventory will extend the US housing recovery another couple of years.
Shadow inventory can be simply defined as real estate that is about to be listed for sale. CoreLogic estimates that shadow inventory is about 29% of the total of "visible" plus shadow inventory. As defined by CoreLogic, shadow inventory has 3 components:
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Properties that have completed the foreclosure process and are now in the hands of the mortgage holder, but not yet listed for sale. They estimate this component to be 390,000 properties nationally or an additional 1.1 month of supply.
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Properties on which the foreclosure process has started but not completed. They estimate this component to be 430,000 properties nationally or an additional 1.2 month of supply.
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Mortgaged properties where the borrower is 90 days or more delinquent but for which the foreclosure process has not started. They estimate this component to be 770,000 properties nationally or an additional 2.2 month of supply.
I think that over the past 3 years, about 1 million homes per year have gone through a foreclosure. So, this roughly 1.6 million homes of additional foreclosure inventory is significant. Nationally, it would equate to another year and a half of more foreclosures. But, like the old saying goes, all real estate is local ( or maybe thats politics). Either way, I thought it would be interesting to see what we may have in terms of shadow inventory.
The only statistic that is readily available is the bank inventory of homes that is not listed in MLS (the first bullet point above). Unfortunately, this is also the smalles component. But lets just assume that whatever that number is, that it represents one quarter to the total, roughly the national average (390,000/1,600,000).
According to IMAPP (which gets its data from the local county property appraisers), there are 1,014 residential properties currently owned by banks. Of this, 388 are vacant pieces of land (mostly in south county). That means that there are 626 bank owned condos, single family homes, and other assorted types of residential dwellings owned by banks. According the the MyFloridaRegional MLS, there are 190 such properties listed for sale. That means that banks own 626-190 or 436 residential dwellings that they dont have listed for sale. If this is one quarter of all shadow inventory then Sarasota County has roughly 1744 units of residential shadow inventory.
Given that over 8000 single family homes and condos have sold in the past 12 months, 1700 in shadow inventory doesn't seem that bad. In fact, its only a little over 2 months of additional supply. However, it may well still drag out for 2 more years, simply because the it may take the banks that long to complete all of the foreclosures - but selling it shouldnt be a problem, especially given the current lack of bank owned inventory and the pace at which it historically sells. And also, just as the national shadow inventory is not evenly distributed across the states, Sarasota's shadow inventory is not evently distributed across the county.
More on this next month.