Official Blog of the Only Foreclosure Site Built by Foreclosure Investors, for Foreclosure Home Investors

HomeHousing MarketShadow Inventory, 1.4 million homes to hit the market

Shadow Inventory, 1.4 million homes to hit the market

By: Alexis McGee | Written: June 3, 2012

Shadow InventoryThere is a back log of foreclosure inventory that has built up over the past 2 years from the Robo-signing fiasco when lenders slowed down processing new foreclosures, that must be sold by the banks. These properties are being released as you read this, all over the country right now. If you want to how to profit from this shadow inventory, watch my webinar recording at the end of the article.

The questions on everyone’s mind are “How and when will these foreclosures be released to the open market” and “When are they going to be released” and “How will this wave of properties affect prices and the housing market overall”?

Those are the million dollar questions…

To begin, real estate research firm Corelogic just released their April housing report which shared that foreclosure shadow inventory is at about the same level they were at the first of the year – before the 49 state Attorney Generals signed their settlement agreement with major lenders. The report found that approximately 1.4 million homes, or 3.4% of all homes with a mortgage, were in the national foreclosure inventory compared to 1.5 million, or 3.5% a year earlier.

Not much has changed in the last year. But this is the quiet before the storm.

The current back log of “shadow foreclosure inventory” at its current level represents about 39% of the 3.6 million foreclosures completed across the country since the start of the financial crisis in September 2008.

Nationally the inventory of homes in foreclosure has leveled off over the first four months of 2012. The inventory of homes in foreclosure in judicial foreclosure states is growing, but it is declining in non-judicial states where the processing timelines to clear a foreclosure are shorter.

Four of the five states with the highest foreclosure inventory as a percentage of all mortgaged homes were judicial states:

  • Florida (12.0%)
  • New Jersey (6.7%)
  • Illinois (5.3%)
  • New York (5.0%).

The five states with the highest number of completed foreclosures for the 12 months ending in April 2012 also accounted for 48.8% of all completed foreclosures nationally:

  • California (142,000)
  • Florida (92,000)
  • Michigan (60,000)
  • Texas (58,000)
  • Georgia (57,000).

So What’s Next with Shadow Inventory?

We all know that employment and the real estate market remain closely linked: Each relies on the other for growth. The key to a better real estate market remains a high employment rate that gives more buyers the ability to qualify for a loan. Plus, we need our government to stop hindering the market with increased FHA loan fees, excessive regulations on older homes, and a centralized appraisal system that’s destroying market values.

According to a recent survey on shadow inventory, many want to keep the ‘shadow inventory’ of  foreclosures from lowering home values by having lenders offer lease-purchase  programs to help reduce their foreclosure inventories compared to other options.  In fact, one in four (28.3%) Americans prefer the lease-purchase option instead  of:  Selling them slowly to preserve home values (12.8%); Selling them to  investors to fix up and rent out (11%); Continuing business as usual (10.8%);  Selling them quickly to eliminate the backlog even if home values suffer  (10.6%); And renting them out until prices improve (8.7%).

However, imagine where our housing market would be if we gave real estate investors incentives to purchase homes – such as tax breaks or the ability to roll the cost of repairs into conventional home loans? This would not only help reduce the inventory of foreclosed homes more quickly, but it would not destroy property values.

If you want to learn how to profit from this back log of shadow inventory, watch the recording below of my live call “5 Overlooked Ways to Master REO Foreclosures.”

What do you think is the best way to work through this back log of foreclosures? Please pipe in below…

 More Articles on Shadow Inventory:

Leave a Reply


  1. […] their selling of their foreclosures, to raise much needed cash. As I just blogged “Shadow Inventory, 1.4 million homes to hit the market” we have a big backlog of foreclosure inventory to work […]

    • Muhammad says:

      he plans tovisit Damascus soon to press for a halt to the vioelnce and better accessfor humanitarian groups. The Eagles also handed a huge contract to Nnamdi Asomugha, who wasn’t exactly the model for leaving everything out on the field every game. Stream flow analysis corresponds to sun cycles. You are here: Home bb Paddy Power vs Ruby Walsh – Head toa0Head!

  2. […] their selling of their foreclosures, to raise much needed cash. As I just blogged “Shadow Inventory, 1.4 million foreclosure homes to hit the market” we have a big backlog of foreclosure inventory to work […]

  3. […] Shadow Inventory, 1.4 million homes to hit the market […]

  4. […] Shadow Inventory, 1.4 million homes to hit the market […]

    • Oseng says:

      As far as finding pptreroies goes, if you don’t plan to be a full time investor, call one of your local investors (or several) and see if they have any pptreroies that they’ll wholesale to you. Contact . Most investors attract more pptreroies than they can logistically handle with their marketing campaigns and will gladly flip one to you for a few thousand dollars profit and let you make the “lion’s share” of the profit for your hard work. Get pre-approved or have cash on hand, though. Most investors will want you to be able to close in less than 15 days.As indicated, you’ve got a LOT to learn before you make this leap. However, here’s the basic formula that’s served thousands of rehab investors well. Never, never, never (did I mention, never?) pay more than 70% of Full Market Value (as determined by comps, not list prices) MINUS any needed repairs to reach your Maximum Allowable Offer (MAO).Got it? FMV X .70 repairs = MAO And you never want to pay MAO if possible. Learn to negotiate. Especially if you’re not doing the work yourself!Learn it, know it, live it. If you stray from this formula, you’re going to a seminar at the school of HARD KNOCKS!There’s a ton of books/cd’s/dvd’s out there from every real estate “GURU” on the planet. Ron LeGrand’s stuff is a very good intro into the business but for a free forum FULL of good information join our cub here or contact Please keep in mind that HGTV makes it look easy. And what they skip over is the most important part .You don’t make money in Real Estate when you sell, you make it when you buy!HTHReferences : Me. RE Investor

  5. […] Shadow Inventory, 1.4 million homes to hit the market […]

  6. […] Shadow Inventory, 1.4 million homes to hit the market […]