A little over a year ago, I wrote a series of posts in which I argued that “shadow inventory” (foreclosed homes held off the market by the banks) was nearly non-existent.
- "Shadow Inventory" Conspiracy Theories Are Nonsense
- Shadow Inventory Gut Feelings, Rumors, & Anecdotes
- Undocumented Shadow Inventory Scarce in King County
Despite all of the data I brought to the table to support my claims that shadow inventory was a non-issue, there were still many commenters who chose to believe that banks were in fact sitting on large amounts of foreclosed homes that would spill out on the market any day now.
At the time I wrote those posts in late 2013 King County was seeing around 550 notices of trustee sale and roughly 250 new MLS-listed foreclosed homes hit the market each month.
If there was ever a time for banks to unload a bunch of foreclosed homes they’ve been sitting on for years, now would be that time. Inventory is at its lowest level on record, home prices are nearing their previous peak levels, and buyer demand is still strong.
As yet, over the past 30 days there have been just 147 newly-listed foreclosed homes (via this Redfin search). As of December, King County saw a little more than 300 notices of trustee sale. That’s a 45 percent decline in foreclosure notices and a 41 percent decline in MLS-listed foreclosed homes since late 2013. The foreclosure pipeline continues to chug along just as you would expect it to with zero evidence of any bank shenanigans.
If we couldn’t put the “shadow inventory” myth to bed before, I think it is 100 percent safe to do so now. Sorry if you were holding out hope that home prices would collapse again when a flood of bank-owned homes finally hit the market. We all have to give up our fantasies eventually.