Distressed Properties Show Wide Regional Variations - | ArmandoMontelongo.com

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Shadow Inventory Backlog Reaches 46 Months

The “shadow inventory” of distressed properties across the country would take almost four years to clear under current sales conditions, according to a new report.

The Standard and Poor’s Rating Services report, as cited by the Real Estate Economy Watch blog, noted a wide regional variation in the number of overdue mortgages and houses in the foreclosure process but not yet available for sale – the so-called “shadow inventory.”

The national average to sell off the shadow inventory is 46 months, but the numbers are as high as 212 months – almost 17 years – in New York City, 86 months in Boston, 72 months in Chicago, and 71 months in Atlanta.

The totals do not include loans guaranteed by government-sponsored agencies Freddie Mac and Fannie Mae.

Other highlights of the report:

  • In states where foreclosures must go through the courts – dubbed the “judicial” states – the time-to-clear numbers are significantly higher.
  • The value of the distressed mortgages used in the report was $354 billion.
  • In recently completed foreclosures, borrowers missed payments for an average of 2½ years.
  • The first-default rate across the country fell to 0.67 percent in March, the lowest level since May 2007.

What do you think? Are there opportunities for investors in these areas? Are you in these markets? Let us know: