Is There Shadow Inventory In Phoenix?
Shadow Inventory as it relates to real estate is the belief that there are thousands of homes in the Phoenix metro area that banks are “getting ready” to release onto the Phoenix housing market. You may have heard someone state “shadow inventory” as the reason you or someone you know should wait to buy a Phoenix home.
The logic is there. Currently Phoenix is experiencing a supply vs demand challenge. There simply is not much supply and too much demand for homes in the Phoenix metro area. This supply vs demand challenge has led to multiple offers on single family residential homes in Phoenix and offers {in some price ranges} well above asking price. To many, this housing market is reminiscent of 2005 and 2006 when housing prices sky rocketed 47% in the Phoenix metro area.
So if you believe there is shadow inventory in Phoenix, why not wait to buy a home in Phoenix? When there is more selection. Why put yourself through multiple offer situations, “highest and best” and NO contingencies?
But what if the people advising you are mistaken? What if there is not this flood of homes the banks are holding in Phoenix? What if waiting to buy in Phoenix will cost you more time and money?
In the short video below, Fletcher Wilcox, Vice President of Business Development for Grand Canyon Title, one of the most well known real estate analysts on the Phoenix housing market and I discuss what shadow inventory is. In the video below Fletcher defines shadow inventory in three ways:
- Shadow Inventory defined as properties being held by a lender, not currently on the market in Phoenix
- Shadow Inventory defined as the number of properties in Phoenix in the foreclosure process that may become future lender owned or REO properties
- Shadow Inventory defined as Phoenix households 90 or more days late on their mortgage that will eventually go into foreclosure and flood the Phoenix housing market
As you can see from the video above, shadow inventory may be a real concern in some parts of Nevada, Florida, California and Georgia but with housing prices increasing by 6.1 percent in March 2012 compared with March 2011, according to the new S&P/Case-Shiller Home Price Index, I would say we are well on our way to a recovery in Phoenix. The flames of the housing market in Phoenix continue to be fanned by large investment sales, increasing investor activity and a reprieve from the waves of foreclosures that plagued the Phoenix metro area.
If you are considering buying a home in Phoenix, now is a great time. Interest rates are at record lows and home prices {while certainly increasing fast} are still well below their hay day. Because housing markets differ from city to city in metro Phoenix you would be well served to speak with a Phoenix REALTOR® that specializes in the area you would like to buy in. Picking the right Phoenix REALTOR® will save you time and money. See Qualities To Look For In A Real Estate Agent. In my capacity as the Director Of Sales Technology for Grand Canyon Title in Phoenix, I work with some of the best Phoenix REALTORS®, I will be happy to refer you to a Phoenix REALTOR® to help you find a home that suits you and your family’s needs, and a lender too. Simply fill out the form below. I hope you already know what title company you should choose in Phoenix {wink – wink}. Just like now is a great time to buy a home in Phoenix, now is a fantastic time to sell your home in Phoenix.
