There isn’t a Shadow Inventory
I think there is confusing misstatement of the term “shadow inventory” being bantered around in the media and blogging world. How can something be considered “inventory” when the property is still owned by the original borrower. These properties are in various stages of the foreclosure process but the outcome is far from certain.
If you analize the properties in this foreclosure process you will discover lots of these owners are only upside down a relativly small amount or generally not very. If nearly all these owners believe the market is appreciating again then they will find a way to make there loans work and avoid foreclosure. If not many will cut bait and let the property go.
So I believe the depth and length of this foreclosure crisis will be primarily determined by the consensus opinion of the general population. If the prevailing belief is the real estate markets are going up and will keep doing so for the foreseeable future than likely that the foreclosure crisis will end reasonably fast.
Mathematically and media reports the real estate markets are generally improving as we speak. Certainly in my primary area “Los Angeles” that appears to be true.
It is certainly possible that some powerful event or trend could knock the wheels of the train. But it’s a big train which is picking up speed. And this train has definatly left the station.
Bottom line. Buy foreclosures while you can.
Seth Phillips
www.SmarteRealEstate.com