The National Association of Realtors, NAR, put together a great piece on the Shadow Inventory that finally gives us relatively trustworthy numbers for Shadow Inventory in Minnesota.
If you are not familiar with what Shadow Inventory is, it is the number of homes about to go into foreclosure or in the midst of foreclosure that are not represented on the current MLS statistics. This has been an ominous “shadow” over the housing market as there are speculations on the size of this inventory ranging all over the map.
From NAR’s estimates, Minnesota is running about in the middle of the pack to the higher end for Shadow Inventory. This differs from my belief that we were going to be on the low side of the scale.
What does this mean? One way to explain this might be to say, we are GroundHogs and popped our heads out and we just saw our Shadow (shadow inventory) which means, there is another 11months of housing market winter.
Before we all begin to panic, keep in mind a couple things. 1) This is research done by Economists. 2) Economists are slightly less accurate than Weathermen.
Month supply can change drastically by sales picking up pace, i.e. if you have 11 houses for sale and you sold 1 in the last 30 days – you have an 11 month supply of inventory. Now let’s say the next month you sold 2 houses with 10 houses left for sale – you just dropped down to a 5 month supply of inventory. It is more of a barometer on the pace sales.
This is a great report and is worth your time to review it. I just covered a couple highlights of this short report.
Read Full Foreclosure Inventory Report from NAR
- Visible Existing Home Inventory declines 17% year-over-year in November (calculatedriskblog.com)
- S&P: 45 months to clear shadow inventory (housingwire.com)
- Distressed Inventory Slowly Diminishing (economistsoutlook.blogs.realtor.org)