California's housing slump isn't going away

The Sacramento BeeMarch 22, 2012 

The wreckage of California's real estate crash is still washing up on the shoreline.

California, Florida and Illinois accounted for more than a third of the nation's 1.6 million housing units classified as shadow inventory in January, according to CoreLogic, a Santa Ana-based mortgage-tracking company.

CoreLogic defines shadow inventory as properties with 90 days-plus delinquencies, foreclosures or those that are lender-owned.

On a year-over-year basis, CoreLogic said Wednesday that U.S. shadow inventory was down from January 2011, when it stood at 1.8 million units, or eight months' supply.

This year's January total, which CoreLogic equated to six months' supply, virtually matched that reported in October last year.

CoreLogic said shadow inventory growth has been offset by the roughly equal flow of distressed sales – short and lender-owned.

"Almost half of the shadow inventory is not yet in the foreclosure process," said Mark Fleming, CoreLogic's chief economist. "Shadow inventory also remains concentrated in states impacted by sharp price declines and states with long foreclosure timelines."

By definition, that includes California. And as a byproduct, the Sacramento region.

For more than two years, distressed home sales have dominated the Sacramento region's real estate market, pressing prices downward and making it difficult for other sellers to compete.

Irvine-based RealtyTrac said the number of foreclosure sales in the eight-county Sacramento metropolitan area in 2011 totaled 24,214, up more than 13 percent over 2010. RealtyTrac said the average local sales price for 2011 was $181,058, a nearly 10 percent decline from $201,126 a year earlier.

"The shadow inventory remains persistent even though many other metrics of the housing market show signs of improvements," said Anand Nallathambi, president and CEO of CoreLogic. "As we move into what is traditionally the peak selling season for real estate, servicers will certainly be watching closely to see if now is the time to move more inventory out of the shadows."

For every two U.S. homes available for sale, there is one home in the "shadows," according to CoreLogic.

Industry analysts said pinning down numbers for shadow inventory not yet on the market is tricky. And CoreLogic did not break out specific metropolitan areas in Wednesday's shadow inventory report.

But there are some clues to its depth.

Last week, CoreLogic said about 1.4 million U.S. homes, or 3.3 percent of all with a mortgage, were in the foreclosure inventory as of January this year.

CoreLogic said the number of loans in the U.S. foreclosure inventory decreased by 145,000, or 9.5 percent, in January this year compared with January 2011.

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