The Dallas-Fort Worth area has one of the lowest “shadow” inventories of unsold homes among major U.S. cities, according to a new study. But the addition of these houses to the market still significantly adds to the supply.
Shadow inventory homes are properties that have been foreclosed on or are in the process of foreclosure but are not currently listed for sale. Housing analysts say this pending supply will keep prices depressed in many cities.
Nationwide, there were more than 2 million shadow inventory homes in August – an eight-month supply – according to researchers at CoreLogic Inc. In the Dallas area, the shadow inventory was 6.7 months, the California-based mortgage and finance analysts said in a report released Monday.
Among the 50 largest U.S. cities, the average shadow inventory is almost 16 months, CoreLogic found.
The highest shadow home inventory was in the Miami area. All of the Texas markets were near the bottom of the shadow inventory list, with the lowest in Austin.
Statewide, Texas’ shadow home inventory is 5.5 months, according to CoreLogic.
“Not surprising that Dallas and Texas, in general, show relatively low shadow inventory,” said Dr. James Gaines, economist with the Real Estate Center at Texas AM University. “We simply didn’t get as overextended nor have we had the volume of foreclosures relative to other markets.”
The nationwide shadow inventory of homes has grown about 10 percent in the last year. “The weak demand for housing is significantly increasing the risk of further price declines in the housing market,” Mark Fleming, CoreLogic chief economist, said in the report.
“This is being exacerbated by a significant and growing shadow inventory that is likely to persist for some time due to the highly extended time-to-liquidation that servicers are currently experiencing.”
Along with the shadow inventory, there is a 7.2-month supply of pre-owned homes for sale in the D-FW area, which works out to almost 40,000 single-family homes listed with real estate agents in the Multiple Listing Service.
CoreLogic’s data suggests that more than 30,000 shadow inventory homes will be coming on the market in the Dallas-Fort Worth area. The combined inventory – if the numbers are accurate – would be similar to what North Texas saw in the early 1990s, when MLS inventories were near a 14-month supply.
Over the entire country, the combined inventory of homes on the market and in shadow inventory adds up to about 23 months’ worth, CoreLogic said.