Latest data on Miami “Shadow Inventory”

December 23, 2011

It is the #1 factor that will affect the Miami real estate market in 2012.

What is “Shadow Inventory”?

Shadow Inventory is the inventory of foreclosed (or soon to be foreclosed upon) homes held by lenders that has not yet hit the MLS to be sold.

Reason for Shadow Inventory:

The “Robo-Signing” scandal of 2010 and 2011 prevented the banks from processing their foreclosures and subsequently re-introducing them to the market as REO (Real Estate Owned or Foreclosure) listings.  Banks were forced to fix their procedures and several foreclosure mill law firms that represented the banks went out of business.

Forecast for 2012:

Now that the banks have addressed the “Robo-Signing” issues, the expectation is that the pent up supply of foreclosed homes will come to the market in 2012.   The expectation is that this will cause downward pricing pressure on Miami real estate (as well as other markets).

The question is how much of an impact will this introduction of the Shadow Inventory actually have on values in Miami for 2012 and 2013.  According to Miami MLS statistics,  Miami’s real estate market is on a major rebound.  Miami Dade’s supply of housing is 40% less today than it was 14 months ago (14,630 listings in November 2011 vs 24,368 listings in Sept 2010).  I have yet to hear of another market in the U.S. or abroad where housing supply has come down so dramatically!

Michael Lux of Alterra Mortgage sent the data below from CoreLogic:

“Residential shadow inventory is on the decline, falling to 1.6 million units and representing a supply of five months, a new report from CoreLogic shows.

One year ago, nationwide shadow inventory stood at 1.9 million units, marking a six-month supply. Shadow inventory is 22 percent lower than the peak reached in January 2010 of 2 million units — or 8.4 months of supply.

CoreLogic calculates shadow inventory by taking into account the number of distressed properties not yet listed on the multiple listing services that are more than 90 days delinquent, in foreclosure, and real estate owned by lenders.

Jason’s Opinion:

Sellers will benefit from selling in the first half of 2012 and purchasing or moving up in the second half of 2012 when Shadow Inventory makes its way to the Miami MLS (combined with the fact that the 2nd half of the year is low season for home purchases).  Regardless, it appears that the Shadow Inventory will have less impact than originally thought.  Buyers should capitalize on today’s record low interest rates in the 4% range.  Call Michael Lux at Alterra Mortgage at 954-612-2690 to lock in these rates for your next purchase.

Are you selling?  If so, contact Jason Smith for a no-obligation consultation…


ShowcaseMiami Realty specializes in assisting homeowners to Sell their Miami home.

(Highest price in the Shortest period of time)

To discuss a strategy for your home, call…

Jason Smith

Broker (Seller Specialist)

ShowcaseMiami Realty


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