Is there Really 7 Million Homes in "Shadow" inventory?

It would be great for me if there were a ton more inventory coming. But, I look at these types of articles saying doom is around the corner as hearsay because there is no hard data to support their position. They could be right. They could be wrong. The inventory levels here are at 3 year lows. That is a fact I know based on real data. The post office did a vacant home study in May saying there were 24,000 vacant homes in the greater Sac area all the way from here to Stockton to Truckee to Yuba City. The definition of vacant was 90 days or more without picking up mail. That is another factual data reference. In placer county, 87% of all Trustee sales scheduled were postponed in August. In Sac County, 92% of all Trustee sales scheduled were postponed in August. Both of these, factual data points that are telling. In Placer County, 221 Trustee Sales were schedule for the month of August. In Sac County, 1224 Trustee Sales were set for the month of August. Total available inventory on August 31st was 8995 properties in the Tri County Area. That is down over 71% year over year. My investment group is in the middle of a study to find out exactly what the trends are from new inventory coming to market and will keep a running tally of that data.

My point, I hear a lot opinions given in the media without real data. Most of the chatter is broad stroke based on national data if any at all. It is also meant to keep the ratings up for the particular media outlet with the “story”.

I do my best to study the market here locally. It is impacted to an extent by national issues, but does not correlate to every national trend. Yes, there are vacant homes. How many exactly? Who knows. Are all of those already foreclosed on and waiting to hit the market? Doubtful. Even the 24,000 number in May does not break out bank owned or any property for sale at the time. Bottom line, it is more cost effective for the banks to slowly inject inventory in whatever manner they choose to do it (foreclosure or short sale). It is also more cost effective for them to NOT take in hard asset inventory.

What does it mean in my opinion… We will not see huge spikes in available inventory even if we see spikes in the default rate. We will and are seeing banks encouraging short sales because it keeps the homes occupied. Occupied homes are generally in better repair and have less chance of vandalism than non-occupied. Etc, etc… I hear all the terms of “shadow inventory” and over 7 million homes that the banks have in hold pens waiting to release onto the market and on and on, but where is the data? Where exactly are those homes? Which banks have them? It is all questionable info at best. It may be true, but there is more than an off chance that it may be inflated for a sensational impact. Either way, the banks will not do anything that they do not see as in their own best interest. A massive release of inventory or wave of foreclosures just doesn’t seem to me to be a strategic move that would be in their best interests today or in the near future.

I know, I did not address the broader economy and jobs and so on. It could all get worse. It could all stay the same. It could all get better. It is not relevant to whether or not banks have or do not have a huge amount of inventory. It is also not relevant as to whether or not it is in the banking sector’s best interest to release a huge wave of inventory even if they had it… Am I way off the reservation?