National residential shadow inventory fell to 2.3 million units as of October, representing a supply of seven months and 12.3 percent drop from the previous October, according to CoreLogic, a provider of national real estate analytics.
That decline in shadow inventory represented 85 percent of the 2.7 million properties currently seriously delinquent, in foreclosure or in REO, according to CoreLogic.
"The size of the shadow inventory continues to shrink from peak levels in terms of numbers of units and the dollars they represent," Anand Nallathambi, president and CEO of CoreLogic, said in a statement. "We expect a gradual and progressive contraction in the shadow inventory in 2013 as investors continue to snap up foreclosed and REO properties and the broader recovery in housing market fundamentals takes hold."
Of the 2.3 million properties in the shadow inventory, 1.04 million units are seriously delinquent, 903,000 are in some stage of foreclosure and 354,000 are already in REO.
As of October 2012, the dollar volume of shadow inventory was $376 billion, down from $399 billion a year ago.
"Almost half of the properties in the shadow are delinquent and not yet foreclosed," Mark Fleming, CoreLogic’s chief economist, said in the statement. "Given the long foreclosure timelines in many states, the current shadow inventory stock represents little immediate threat to a significant swing in housing market supply. Investor demand will help to absorb the already foreclosed and REO properties in the shadow inventory in 2013."
