The Other Shadow Inventory – Coming Soon!

For years now Realtors, bankers and economists have been talking about a shadow inventory consisting of foreclosures that banks have held back from the market.  I’ve been selling foreclosures for banks since 2008, and one thing I haven’t seen them do is intentionally hold off on putting homes on the market.  I have seen former owners sue, making it impossible to sell those properties until the litigation is cleared.  So I do believe in the shadow bank inventory, just not in what has caused it.  In the meantime another shadow inventory has been growing and will soon hit the market.

There are potential sellers out there that have been waiting for the market to rebound.  This spring we will see a lot of these sellers.  There are landlords who right now are giving their tenants 60 days notice to find another place.  I personally know several landlords and tenants who are in this situation.  The landlords have just been waiting for the market to come back so they can put their money elsewhere.

There are elderly homeowners who watched their nest eggs dwindle when their home values declined.  With the resurgence of values we will see more sales of these retirees, and more corresponding sales in assisted living places like Villa Marin and Drake Terrace here in San Rafael.  Again, I’ve got my ear to the ground on this one and have encountered several sellers looking to finally unload their largest asset and move into an easier lifestyle that doesn’t require home maintenance.

The are are also potential sellers out there who bought their homes on the market upswing or near the peak, watched the values decline and are now ready to hop off the home valuation roller coaster.  We are seeing a trend of these sellers liquidating as they are finally able to become whole or minimize their losses from their previous purchases.

There are still short sales, bank owned sales and all manner of distressed sales that will hit the market at some point.  Is there a wave of such properties on the horizon?  I don’t think there ever has been.  There were a lot at one point. Foreclosure numbers grew, stayed high for several years and they are now receding.  It’s been a process of working through bad loans and a historically bad economy.

Things are better now.  More and more people are willing and able to sell because prices are rising.  With any luck by late this year we may even find there are enough properties on the market to meet the buyer demand.  Right now that’s looking like a stretch, and having sold real estate for the past nine years I don’t really believe in any sustainable market equilibrium in the North Bay.  The prices are usually either going up or down.  Right now they are going up, it’s a great time to sell, and more and more types of sellers are catching on.