January Shadow Inventory Down 18% from Last Year

MAR 26, 2013 12:43pm ET

Shadow inventory figures continue to fall from their peak highs three years ago, according to data released today by CoreLogic.

The current residential shadow inventory through January was at 2.2 million units, signifying a supply of nine months. This figure represents an 18% drop from a year ago, when 2.6 million properties were considered to be shadow inventory.

Additionally, the latest numbers are down 28% from January 2010, when shadow inventory reached a record high 3 million homes.

“The shadow inventory is declining steadily as properties are moving through the distressed pipeline,” said Mark Fleming, chief economist for Irvine, Calif.-based CoreLogic. “States like Arizona, California and Colorado are experiencing significant declines year over year in the stock of serious delinquencies, a positive sign for further improvement in the shadow inventory.”

Of the properties deemed to be shadow inventory, 1 million units are seriously delinquent (4.1-month supply), 798,000 are in some stage of foreclosure (3.2-month supply) and 342,000 are already in REO (1.4-month supply).

As of January, serious delinquencies—which are the main driver of shadow inventory—declined the most in Western states such as Arizona, by 40%, California was down 33%, Colorado fell by 27% and Wyoming had a 23% drop.

Through the end of January, the value of shadow inventory was $350 billion, down from $402 billion a year ago.

“At this point in the recovery, we are seeing healthy reductions across much of the nation,” said Anand Nallathambi, president and CEO of CoreLogic. “As we move forward in 2013, we need to see more progress in Florida, New York, California, Illinois and New Jersey which now account for almost half of the country’s remaining shadow inventory.”

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