Lenders are increasingly turning to short sales for foreclosed properties, providing relief for both the distressed homeowner and the U.S. residential real estate market, MSNBC reported.

Short sales, where lenders agree to allow the owner to sell the home for less than its worth, rose by 26,000 this year even as foreclosures fell by 255,000, according to Hope Now, a resource for homeowners facing foreclosure.

Short sales benefit homeowners as they shorten the relief process, and allow them to begin rebuilding credit scores sooner. [more]

Click to enlargeShadow inventory nationwide remained at 1.6 million units through October 2011, approximately the same level as in January 2009, according to a report from CoreLogic. Florida, California and Illinois accounted for more than a third of the shadow inventory across the United States, with the top six states accounting for about half of all shadow inventory. Overall, for every two homes for sale in the country, there’s one home lurking in the shadow. — Alexander Britell [more]

Considering the sluggish sales activity, rock bottom pricing and glut of foreclosures, the national housing market is suffering from a new, surprising problem. According to the Wall Street Journal there is actually a lack of inventory, as the number of home sales has declined 20 percent in the last 12 months to 2.19 million homes, according to Realtor.com.

Though declining inventory is usually seen as a sign of a healthy market, the current shortage has arisen for two reasons: banks have been slow to process foreclosed properties that would otherwise be on the market and sellers reluctant to accept discounted prices are pulling their homes off the market. [more]

Click image to enlargeThanks to a slowdown in the pace of new delinquencies, nationwide shadow inventory declined, according to a report released today by CoreLogic. Shadow inventory dipped to 1.6 million units in July, down from 1.7 million units last measured in April and 1.9 million units a year ago. The current supply represents five months-worth of homes.

Shadow supply, which includes homes that are seriously delinquent, in some stage of foreclosure or are real estate owned, comprises 29 percent of the total July inventory of 5.4 million. Last year at this time the total visible and shadow supply was 6.1 million units. – Adam Fusfeld [more]

Source: CoreLogic (click to enlarge)

Nationwide shadow inventory fell slightly in April from a year ago to 1.7 million units, or about five months-worth of supply, according to a report released today by analytic firm CoreLogic. But there are still about four times as many units in shadow inventory as there were before the downturn. Shadow inventory accounts for homes that are seriously delinquent, in foreclosure or owned by lenders, but are not currently listed. Shadow inventory reached its peak in January 2010 with 2 million units, or 8.5 months supply, according to CoreLogic. In April 2010, the shadow inventory of residential units sat at 1.9 million units. “The shadow inventory has declined by nearly one-fifth since it peaked in early 2010, in large part due to a reduced flow of newly delinquent loans in recent months,” said Mark Fleming, chief economist for CoreLogic. “However, it will probably take several years for the shadow inventory to be absorbed given the long timelines in processing and completing foreclosures. – Adam Fusfeld
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The New York metropolitan area is leading the country with 103.1 months worth of residential shadow inventory — distressed properties that haven’t come on the market yet — according to property appraiser Jonathan Miller, who analyzed just-released data from Standard & Poor’s (see the full report below). That’s more than eight-and-a-half years’ worth and a 3.3 percent increase over the shadow inventory level in the region last year at this time. Trailing New York by a long stretch is the Miami metropolitan area, which has 61.8 months of distressed properties in the pipeline, down 8.1 percent year-over-year. Despite that improvement, Miller points out that 61.8 months of shadow inventory — upwards of five years — is nothing to brag about. [Matrix]

Shadow Inventories Variations

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As the housing crisis has deepened, the national shadow inventory has grown, according to appraiser Jonathan Miller, head of Miller Samuel. Miller described this glut of residential properties as either under construction or newly completed but not officially up for sale because the sales have stalled. “In many cases the developer was unable to sell the initial block of units offered and is therefore unable to release the units behind them,” he explained. This inventory can be dangerous to contend with, according to Miller, because it’s been largely unchanged by the recent uptick in residential activity. “Even with the surge in activity over the past several months, total inventory hasn’t changed all that much,” Miller said.