Repossessed Homes For Sale
The banks are holding a "shadow inventory" of repossessed homes for sale and not putting them up on the open lists for fear of further depressing the market. Industry observers are noting that the lenders across the country are sitting on thousands of such houses that have not been listed as repossessed homes for sale as yet.
Rick Sharga of RealtyTrac, one of the prime compilers of foreclosure data, said, "We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market. California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You'd have further depreciation and carnage."
RealtyTrac conducted a survey of bank repossessed homes for sale to the MLS listings in four states including California. It found many disparities. - 30% of the foreclosed house was listed in the MLS. The remainder is termed the "shadow inventory".
Celia Chen, of Moody's Economy.com said, "There is a real danger that there is much more (foreclosure) inventory than we are measuring. Eventually those homes will have to be dealt with. If they're all put on the market, that will add more inventory to an already bloated market and drive down home prices even more."
Statistics form MDA DataQuick of San Diego show that in the Bay Area over one third of the foreclosed units are in shadow territory - it means they have not been put up in the county records as resold.
From January 2007 to February 2009 covering 26 months showed that there 51,602 repossessed homes for sale as well as condos in the 9 counties of the Bay Area. But during the same period only 30,823 foreclosed houses were resold. Thus 20,000 bank repossessed homes for sale remain unaccounted.
According to realtors the foreclosed houses generally hit the market a month or two after the lenders take over the ownership. Usually there is a good response within a week or two. But the accounts show that there is a big gap between the numbers of units the banks repossessed and the number they sold. They are holding back stock for the obvious reason of not saturating the market further. But the reality of the houses being there in the locality has not vanished. The blight remains.