Sort-of-Shadow Inventory & The 2018 Housing Market

A decade ago, housing experts warned — incorrectly, it turns out — about a Tsunami of “shadow” inventory waiting to flood the moribund housing market, and drag prices still lower.  See, “Barry Ritholtz Issues Mea Culpa on Housing.”

The source of all those homes?

Banks sitting on millions of foreclosures nationally, waiting for just the right moment to unleash all those homes on the market.

Fortunately, it never happened:  banks bundled their properties by the thousands and sold them, wholesale, to institutional investors.

Meanwhile, climbing prices eventually rescued many previously underwater homeowners.

Fast Forward a Decade

Today, there’s a different kind of shadow inventory afoot.

Namely, all the would-be Sellers whispering to agents they know (myself included) that they’d “be open to selling if they could net $ ______ .”

The catch?

Their price is invariably at least 20% above prevailing prices.

I chalk it up as a side effect of housing’s (very) long-running bull market . . . 🙂



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