U.S. 'shadow inventory' of distressed properties falls to 1.7 million as of April 2011, down from 1.9 million units year-over-year, representing a five-month supply, same as last year: CoreLogic
SANTA ANA, California
June 22, 2011
– CoreLogic (NYSE:CLGX - News), a leading provider of information, analytics and business services, reported today that the current residential shadow inventory as of April 2011 declined to 1.7 million units, representing a five months' supply. This is down from 1.9 million units, also a five months' supply, from a year ago. The decline was due to fewer new delinquencies and the high level of distressed sales, which helped reduce the number of outstanding distressed loans.
CoreLogic estimates current shadow inventory, also known as pending supply, by calculating the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent (90 days or more), in foreclosure and real estate owned (REO) by lenders. Transition rates of "delinquency to foreclosure" and "foreclosure to REO" are used to identify the currently distressed non-listed properties most likely to become REO properties. Properties that are not yet delinquent but may become delinquent in the future are not included in the estimate of the current shadow inventory. Shadow inventory is typically not included in the official metrics of unsold inventory.
* The shadow inventory of residential properties as of April 2011 fell to 1.7 million units, or five months' worth of supply, down from 1.9 million units, also five months' supply, as compared to April 2010.
* Of the 1.7 million current shadow inventory supply, 790,000 units are seriously delinquent (2.6 months' supply), 440,000 are in some stage of foreclosure (1.4 months' supply) and 440,000 are already in REO (1.4 months' supply).
* The shadow inventory peaked in January 2010 at 2 million units, 8.5 months' supply, and stands 18 percent lower than the peak as of April 2011.
* The total shadow and visible inventory was 5.7 million units in April 2011, down from 6.2 million units a year ago. The decline occurred in both the visible and shadow inventories. The shadow inventory accounts for 29 percent of the combined shadow and visible inventories.
* In addition to the current shadow inventory, there are 2 million current negative equity loans that are more than 50 percent or $150,000 "upside down." These current but underwater loans have increased risk of entering the shadow inventory if the owners' ability to pay is impaired while significantly underwater.
Mark Fleming, chief economist for CoreLogic commented, "The shadow inventory has declined by nearly one-fifth since it peaked in early 2010, in large part due to a reduced flow of newly delinquent loans in recent months. However, it will probably take several years for the shadow inventory to be absorbed given the long timelines in processing and completing foreclosures."
The full CoreLogic shadow inventory report with accompanying charts illustrating shadow inventory detail is available at http://www.corelogic.com/_templates/LandingPage.aspx?id=2605
CoreLogic utilized its LoanPerformance Servicing and Securities databases to size the number of 90+ day delinquencies, foreclosures and REOs. Roll rates, which measure the proportion of loans that were in one stage of default that rolled to the next stage of default over a period of time, were applied to the number of loans in default by each stage of default. This calculation allowed for estimating the number of loans that were proceeding from earlier to later stages of default. CoreLogic calculated the share of loans in default that are currently listed on MLS by matching public record properties in default to MLS active listings. It applied the percentage of defaulted loans that are being listed to the estimate of outstanding loans that will proceed to further stages of default to calculate the pending supply inventory by stage of default and added that to the visible inventory that is reported for existing homes and new homes by the National Association of Realtors and the Bureau of the Census, respectively. To determine months' supply for visible and shadow inventories, CoreLogic utilized the number of non-seasonally adjusted home sales according to CoreLogic data.
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