Hundreds of thousands of homes are either in foreclosure or have been repossessed by the banks, but have not yet come on the open market. There are already more homes for sale than people want to, or are able to buy, and with an estimated 1.6 million homes in the country's shadow inventory property prices are likely to remain depressed for years.
The states of Ohio, Georgia, Illinois, Florida and California have the largest shadow inventory is according to Realty Trac, which is a firm that tracks foreclosures and delinquent properties throughout the country.
Property prices in Ohio are down right across the state, and none of the areas seems able to maintain more than one month growth in prices, and it's not just affecting states with large shadow inventories, as Iowa had been largely unaffected by the boom and bust of the housing market, but is now beginning to see the negative effects of shadow inventory.
It can often take as long as a year before the banks get a foreclosure property on the market, and the likelihood is once it does sell it will be for a greatly reduced price.
According to Realty Trac, California has nearly 270,000 homes in its shadow inventory, while Ohio has nearly 70,000 homes. Apparently there are a couple of factors which are slowing down the resale of such properties, as legislators imposed a moratorium on foreclosures in 2009 as well as other delays, and lenders are increasingly seeking to keep homeowners in their property.
The value of the nation's shadow inventory has been estimated at $405 billion, and it's thought it will take at least four years to clear.
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