This is the first part of a multi-part series concerning the shadow inventory in real estate. For more than two years now, it appears as if most real estate publications and reporting services are glossing over what could be the biggest problem in the history of the housing market.
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Measuring The Real Estate Shadow Inventory
So what exactly is the shadow inventory in real estate? It is those houses that need to be sold, but are not on the market. We call it the shadow inventory because we know that they are out there, but we just cannot quite see them.
The shadow inventory consists of:
- Homes the previously failed to sell
- Homes that owners want to sell, but know the market is not able to absorb them
- Homes with loans that are three months or more in default on payments
- Homes that are pre-foreclosure (lis pendens has been filed)
- Homes that are post-foreclosure but not in the MLS
So, how does one go about measuring the unknown? Well, it takes some time, and that is why this will be a multi-part blog.
In researching this, I have downloaded 19,000 listings from the Tallahassee Board of REALTORS® Multiple Listing Service (MLS) and have started working through all of them. In order to measure the real number of homes that failed to sell, we have to run multiple tests on withdrawn, expired, and canceled listings to compare them to those that sold, closed, and were recorded by the Leon County Property Appraiser. Needless to say, it takes some time.
Check back again later this week as we will conclude our series on the Shadow Inventory in the Tallahassee housing market.