The so called shadow inventory is one of the great mysteries of real estate. The shadow inventory is almost as mysterious as the underwriters from the bank who no one ever knows or sees who hide out in undisclosed locations and make all kinds of outrageous requests of lenders.
The shadow inventory refers to those homes supposedly being held by the banks that have been foreclosed on but have not been released on the market for home buyers and investors to purchase. For some time now those “in the know” in the retail and investing sides of real estate have been predicting the release of this shadow inventory into the market. With this release of these houses the bank still has on its books we will see inventories rise and price decline.
But the question for many when it has come to the oft predicted shadow inventory is where is it? When will it be released or will it ever be released? Does a shadow inventory even exist? Some have come to doubt the existence or at least the extent of the shadow inventory. Others are still maintaining that the banks are holding out not wanting to have to write off such huge losses by letting these homes go to the market and sell for a lot less that what is on the books at the banks.
For now, only time will tell whether the inventory comes out of the shadows or remains hidden behind the grassy knoll.