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Housing Market Casting a Smaller Shadow

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The inventory of future short sales and foreclosures which will be coming to the market is known as ‘shadow inventory’. Future real estate pricing will be determined by the number of these distressed properties which eventually reach the market.

These properties sell at major discounts:

  • short sales at a 10% discount
  • foreclosures at a 35% discount

CoreLogic just reported this inventory is declining as more Americans are staying current on their mortgage obligations. Here is a graph from their latest report:

Bottom Line

There still are a substantial number of distressed properties that must be cleared. They will cause prices to soften in many markets. However, it is comforting that this number is finally beginning to decline.

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8 Responses to “Housing Market Casting a Smaller Shadow”

  1. Tami Vroma June 30, 2011 at 7:12 am # Reply

    As a Grand Rapids Short Sale agent, i really appreciate your take on this market. Seems everyone is holding their breath. West Michigan Homes Sales are definitely up here! Would sure like to see us keep getting rid of some of that inventory!

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