Short Sale Investing And Shadow Inventory: How Does It Affect The Real Estate Market
Those doing short sale investing or who are real estate agents dealing with short sales must understand “Shadow Inventory” and what it’s going to mean for your future in real estate.
Some experts say that the shadow inventory doesn’t exist, or that it doesn’t pose a problem, while others insist that the shadow inventory will cause another real estate market crash.
This article will uncover secrets about the shadow inventory that many people don’t want you to know about. After researching this topic in depth, I believe you should understand the concerns.
1. There are currently millions of homeowners who would like to sell, simply so they can relocate for better weather, be closer to family or similar reasons. Instead of selling, they’re waiting. Waiting for the market to change, so they can capture more profit when they sell. This is called “Shadow Inventory” because what would normally be listed on the market is what you might say “hiding” until it’s ready to come out. The problem arises because there will be a time when the media announce the “good market” and all of these people will want to sell at the same time. Can you say “over-supply”? This will drive housing prices down.
2. Let’s talk about the six hundred thousand homes that lenders are holding in their REO inventory. Most people don’t know that when a lender forecloses on a home, they don’t have to sell it right away. They can hold it until they decide to sell. What are they doing? Well, they too are “waiting” for the market to go up so they can add their huge inventory to the market.
3. The staggering number of homes currently in default. This number is estimated at 7 million! These homeowners will be losing their homes to the lenders, who will then add them to their inventory that’s on the market.
There is a solution. Real estate agents being aggressive and working with short sales, and people who are doing short sale investing hold the key. These two solutions will provide to be the saving grace for the nations failing real estate market. Normal sellers will not be able to compete with short sale pricing. If you’re not in the short sale markets, you need to be.