How The Shadow Inventory Affects Wilmington, DE Home Sellers
As your Wilmington, DE real estate agent, I’m asked about the outlook for our Wilmington real estate market. One of the reasons it’s hard to pin down is the presence of our shadow inventory. Every time a home comes through the shadow inventory and hits the market, it can negatively affect the values of the homes around it.
What is the shadow inventory? Simply put, it consists of homes with defaulted mortgages that will eventually go through foreclosure and hit the real estate market.
Estimates place about 2 million homes in the national shadow inventory. This number is a moving target, because as homes go through foreclosure and get sold on the market, the shadow inventory goes down. But it can also be increased if more loans turn sour. Or, if loans that were previously brought current via loan modification, fall behind again.
This is why economists look closely at the number of “new defaults” that are reported by lenders. If we want to see the light at the end of the tunnel, loans have to stop going bad. While this is easier said than done, we’ve seen some progress lately. Banks have stepped up their modification and short sale processes to try and prevent foreclosures. Between this, and some improvements in the economy, it’s hoped that the shadow inventory will shrink.
How are we sitting in Wilmington? By current industry estimates, clearing our shadow inventory could take 72 to 120 months. Why so long? The foreclosure process in Delaware isn’t quick. Each foreclosure can take from 200 days, to a year or more, to be completed. It depends on the volumes, court schedule, and whether or not the homeowner is contesting the foreclosure.
On the bright side, the Mortgage Bankers Association reported that new defaults in the 3rd quarter of 2011 were down by 7.99%. This is good news, because combating the shadow inventory is like dealing with a forest fire; half the battle is keeping it from spreading. A lower default rate now, means a smaller shadow inventory later.
My job as your Wilmington, DE real estate agent is to find ways to sell your home no matter what is pressuring the Wilmington real estate market. If you are struggling with your mortgage, or you simply need to sell your home in order to move on to another opportunity, I can help.
My experience in Wilmington, DE short sales and Wilmington, DE foreclosure sales make me uniquely qualified to handle this market. If you need to sell your Wilmington home, or if you have any questions, contact me. I will be here for you.
Wishing you the best for 2012,