You could be forgiven for putting "shadow inventory" in the same category as the boogeyman or leprechauns -- made up. We've been hearing for years about the huge wave of foreclosed homes just about to hit the housing market.
But the numbers sure look substantial. The owners of more than 90,000 Maryland homes were at least three months behind on their payments as of the end of March, more than 40,000 of which were in the foreclosure process.
Total number of homes (all homes, not just foreclosed ones) sold statewide last year? About 54,000.
The delinquency numbers above don't count homes taken back by mortgage servicers but not yet on the market. They're just pre-auction. And they're drawn from Mortgage Bankers Association data, which captures most but not all of what's out there.
The sheer amount of distress is the reason John L. Heithaus with Rockville-based Metropolitan Regional Information Systems says: "When we look at the shadow, the big question is not if, but when. And where."
"It's not only a shadow -- it's starting to encroach inside the markets, not yet in full force, but the signs are starting to become apparent," said Heithaus, chief marketing officer at MRIS, which runs the area's multiple-listing service.
He expects it will reach into "much higher price points than we've seen before," reflecting homeowners engulfed by job loss rather than purchasers who overleveraged.
But so many variables are at play on timing and effect.
On the one hand, mortgage servicers who slammed on the brakes when the robo-signing scandal hit in late 2010 may be restarting their foreclosure engines now that the national mortgage settlement is a done deal.
But will banks parse out the sales rather than trying to dump repossessed homes onto the market as quickly as possible? How many of the homes might get turned into (or remain) rentals? How many homeowners might avoid foreclosure auction entirely?
All of this matters to people in different ways. Homeowners who don't want foreclosures near them. Buyers frustrated with shrinking choices and eager for more homes to choose from. Sellers who would prefer less competition.
Heithaus figures the effect on the housing market will vary based on "where and when the shadow hits."
"It's still a very, very local business," he said of real estate. "You could have an area ... that’s really hot, and then you go 15 miles to the northwest and it's a different market."
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