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'Shadow inventory' of 2.1 million homes may loom in U.S. market

The number of properties in foreclosure, with loans 90 days past due or taken back by lenders and not yet listed for sale stood at an eight-month supply at the end of August, three months more than a year earlier.

November 23, 2010|By Alejandro Lazo, Los Angeles Times

A supply of 2.1 million homes poised for foreclosure or delinquency potentially looms over the nation's housing market, according to data released Monday.

This "shadow inventory" of residential real estate — property that is in foreclosure, has a loan 90 days past due or has been taken back by a lender and is not yet listed for sale — stood at an eight-month supply at the end of August, according to Santa Ana mortgage research firm CoreLogic, which released the data. That was an increase from 1.9 million, a five-month supply, a year earlier.

The total number of U.S. properties listed for sale at the end of August plus the unlisted shadow inventory was 6.3 million, representing a 23-month supply of homes, according to CoreLogic, more than three times the amount considered healthy by economists. A year earlier, the total was 6.1 million, or a 17-month supply.

"The weak demand for housing is significantly increasing the risk of further price declines in the housing market," CoreLogic chief economist Mark Fleming said. "This is being exacerbated by a significant and growing shadow inventory that is likely to persist for some time."

But whether — and when — those shadow-inventory properties will hit the market remains unclear.

Some big lenders have put foreclosure moratoriums in place after concerns over foreclosure practices emerged in October and November. The Obama administration and local governments also continue to push efforts to modify the loans of troubled borrowers.

alejandro.lazo@latimes.com

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