Shadow Inventory Is Going To Be With Us A Long Time

Sure you could read the Housing Wire article about “shadow inventory” (delinquent loans and REO properties that have not reached the market yet) or you could just look at a picture and see “Houston, we have a problem”.

Here's the money quote for you word lovers:

According to the S&P report, homes are falling into serious delinquency faster than REO transactions are closing. The total balance of seriously delinquent loans reached well over $400bn through November 2009, while the balance of REO properties reached its peak in September 2008 and declined to $50bn. On average, $14.5bn of seriously delinquent loans or REO property liquidates each month. According to the report, it will take 29 months to clear this supply of homes.

Granted this is a look at Q4 of 2009, but the outlook has gotten much better as the year rolls on.