The pending supply of distressed homes – those caught up in foreclosure proceedings but not listed for sale – declined by 200,000 units to 1.8 million as of January 2011, CoreLogic reported today.
This shadow inventory is enough to supply the housing market for nine months, the company said. Roughly half of these homes – 870,000 – are seriously delinquent and could supply the market for 4.2 months. About one-fourth – 470,000 – are already owned by lenders and 445,000 are in some stage of foreclosure.
Loan modifications and short sales could potentially reduce the shadow supply by one-half, said the company, a leading provider of mortgage analytics, but home owners are not eager to participate in the programs. Those who do tend to have high re-default rates.
Another 2 million mortgages are more than 50 percent “upside down” and are likely to enter foreclosure proceedings soon.
The states most affected by these trends are New Jersey, Illinois and Maryland, while the least affected is Texas.