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 January 04, 2009

"PENDING SUPPLY" OF HOMES INCREASES
Homes that are now owned by mortgage companies and banks resulting from foreclosures and those that have payments that are late by ninety days or more are known as the Pending Supply or so-called "Shadow Inventory" of residential real estate. These homes, which would not normally be considered part of the number of unsold residences, have increased by six hundred thousand from September of 2008 through September of 2009. At the present rate of sales, there is an increase in the supply of these units from just under two and a half months the preceding year to a present supply of three and a third months.
Without including the Shadow Inventory, the remaining Visible Inventory, unsold homes that are presently on the market, has actually decreased by nearly one million units or over a seven and one-half months' supply down from a slightly over ten months' supply the preceding year.

The combination of both the Pending Supply and the Visible Supply creates the total inventory of unsold homes, which is down by two hundred thousand from the preceding year and a decrease in the time supply by l.6 months.

Although the months' supply of visible inventory has decreased, when combined with the total Pending Supply, the result is that there is a fair amount of inventory that will undoubtedly effect the residential real estate market for quite a while, once the present upturn in residential sales, which is partly a result of the availability of considerably lower interest rates and the tax incentives for buyers.