Shadow Inventory

AAA

DEFINITION of 'Shadow Inventory'

A term that refers to real estate properties that are either in foreclosure and have not yet been sold or homes that owners are delaying putting on the market until prices improve. Shadow inventory can create uncertainty about the best time to sell (for owners) and when a local market can expect full recovery. Also, shadow inventory typically causes reported data on housing inventory to understate the actual number of inventory in the market.

INVESTOPEDIA EXPLAINS 'Shadow Inventory'

With the unprecedented number of foreclosures stemming from the subprime mortgage meltdown of 2007-2008 and the overall housing market collapse during that crisis, lenders were left with significant real estate holdings. Many lenders were slow to put their inventory up for sale for fear of flooding the market and further driving down prices, which would in turn lower their potential ROI.

RELATED TERMS
  1. Return On Investment - ROI

    A performance measure used to evaluate the efficiency of an investment ...
  2. Foreclosure - FCL

    A situation in which a homeowner is unable to make principal ...
  3. Exclusive Assortment

    A merchandising strategy in which a retailer displays the product ...
  4. Inventory Management

    The overseeing and controlling of the ordering, storage and use ...
  5. Real Estate Owned - REO

    Property owned by a lender - usually a bank - after an unsuccessful ...
  6. Subprime

    A classification of borrowers with a tarnished or limited credit ...
Related Articles
  1. How Fannie Mae And Freddie Mac Were ...
    Economics

    How Fannie Mae And Freddie Mac Were ...

  2. The Pitfalls Of Buying A Foreclosure ...
    Home & Auto

    The Pitfalls Of Buying A Foreclosure ...

  3. The Fall Of The Market In The Fall Of ...
    Active Trading Fundamentals

    The Fall Of The Market In The Fall Of ...

  4. Rate Freeze To Cool Mortgage Meltdown
    Credit & Loans

    Rate Freeze To Cool Mortgage Meltdown

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center