Yesterday, I received an insightful question regarding the shadow inventory of homes in Tallahassee from a reader “Garrett” who asked:
I’d like to hear your thoughts as to whether there is a substantial “shadow inventory” of homes in Tallahassee at the moment? By shadow inventory I mean housing units that are not making it onto the public market for one reason or another. Many of these may be REO units that banks are currently unwilling to put on the market as they will have to accept a write-down. There may also be a substantial number of homeowners who have simply decided to pull homes off the market waiting for conditions to improve. As to the former question, I’m wondering if it’s possible to compare the reported number of homes entering foreclosure, versus the overall numbers of REO homes that actually make it onto the MLS.
As always keep up the good work!
Garrett
First of all, thank you Garrett for a great question that will guide the Tallahassee Real Estate Blog discussion for today (and hopefully for quite some time). I have not addressed the specifics of the shadow inventory of homes for sale in Tallahassee for a few months, so now is a great time to revisit this subject.
Shadow Inventory In Real Estate
Shadow inventory is a term used to describe all of the homes with owners who wish to sell them now but have not placed them on the market. This might include:
- People who have failed to sell their home recently or in the past
- People waiting for the market to improve
- People who are facing foreclosure
- Banks or lenders who have foreclosed on homes
We must remember that there has always been a number of of these in the market, but lately the numbers are stacking up so we are trying to define and measure this unknown number of home sellers in Tallahassee. The resulting figure or analysis must be taken with a grain of salt, as we are unsure how it truly differs from “normal.”
If you want a solid analysis of the “numbers” in shadow inventory, I suggest your read the article on Shadow Inventory in Tallahassee that I wrote in July of this year. The analysis concluded that there was a minimum of 1 to 2 years worth of inventory of homes that were hiding from the market.
For the purpose of answering Garrett’s question, I will attack this question from a different angle. Let us gather up everything that we know, and everything that we do not know, and make an educated guess at the current status of the shadow inventory of homes in Tallahassee.
[click to graphs of shadow inventory in Tallahassee…]
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