Palm Beach County is now seeing a whopping increase in shadow inventory, which is complicating the local real estate market, the Palm Beach Post reported. Shadow inventory, defined as homes going through the foreclosure process or those repossessed by banks and not for sale, makes it seem that there’s more inventory in a market that’s starved for it. But at the same time, the presence of such properties can lower sale prices if a number of them hit the market at the same time.
From the first quarter of 2012, shadow inventory jumped 78 percent to a total of 25,702, the paper said, citing RealtyTrac figures. Meanwhile, the county’s inventory of homes on the market was 5.8 months in February — a 47 percent year-over-year fall.
The numbers for the state of Florida overall are even higher — jumping 82 percent year-over-year to 319,147 from 175,707. This puts the state in second place behind New York State’s 129 percent year-over-year increase in shadow inventory.
Part of the reason for the growth in shadow inventory is the restarting of foreclosure filings, RealtyTrac Vice President Daren Blomquist told the Post. This comes in the wake of the $25 billion National Mortgage Settlement, which included guidelines for banks on how to handle the foreclosure load.
But there’s another reason, according to Ken Thomas, an economist and banking consultant based in Miami — banks are trying to avoid taking a hit on distressed homes.
“They basically just get up every morning and pray the market is better that day,” Thomas told the Post. “In the meantime, these homes just sit and accumulate.” [Palm Beach Post] —Zachary Kussin