Shadow market could be real estate’s tsunami

by Joe Spake on March 14, 2010

Princes Lane looking south, The RocksI have posted about the so-called shadow market, the huge amount of  housing inventory that is foreclosed or “foreclosable” , but that has not yet hit the open market.  I also have tried to factor into the shadow market those homes that were on the market, did not sell, and were pulled off the market to “wait for the market to get better”.  Bottom line, there are a lot of properties out there to be sold that aren’t on the market.  How would 5 to 7 million new listings impact the United States real estate market?

My friend, Tom Royce of The Real Estate Bloggers did a great post on the subject. Tom is on the cutting edge of  real estate news you just can’t find anywhere else.  Follow his post in your RSS reader.

Creative Commons License photo credit: Powerhouse Museum Collection

Joe Spake is a Memphis, Tennessee based Consultant, Real Estate Broker, and Blogger. Call 901.214.5563 for a consultation or click to make a social connection.
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  • TomRoyce

    Thanks for the kind words. I think the problem is that the real estate industry knows this is going on and does not have an answer. It is easier to bury ones head in the sand than to confront the issue head on.

  • http://memphisrealestatebuzz.com joespake

    I fully agree, Tom. 5 Million foreclosures hitting the market, plus an un-definable number of expired and withdrawn listings that didn't sell in recent cycles, plus the government's support and encouragement of short sales could equal the perfect storm. And with homeowners prioritizing credit card debt before their mortgages, the storm will bring a whole new definition of home ownership to this country.

  • Vik

    Nice article. Is there anyway you know of to get data on the potential shadow inventory on a local, or micro-local level?

  • http://memphisrealestatebuzz.com joespake

    thanks Vik. I think the whole weight of the shadow inventory issue is that the data is hidden in the shadows. Not only are the actions of the lien holders unknown until they start formal foreclosure procedures, but the number of homes that have been pulled off the market by homeowners is virtually impossible to track.

  • Vik

    Nice article. Is there anyway you know of to get data on the potential shadow inventory on a local, or micro-local level?

  • http://memphisrealestatebuzz.com joespake

    thanks Vik. I think the whole weight of the shadow inventory issue is that the data is hidden in the shadows. Not only are the actions of the lien holders unknown until they start formal foreclosure procedures, but the number of homes that have been pulled off the market by homeowners is virtually impossible to track.

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