The two biggest and most tenacious rumors in the valley’s real estate market appear to be: foreclosures are rising and there is a “shadow inventory†of foreclosed homes the banks are waiting to release. These are false – despite all the news reports that tend to support such nonsense.
Foreclosures are down significantly in the valley and while we still get the occasional tiny blip up now and again, the trend has been consistently and dramatically down since the start of the year. Comparing the number of foreclosed homes for sale in January of 2012 to January of 2009 – the supply is down 92%. Yes there will always be foreclosures, as sadly the number never goes to zero. However, the numbers are consistently dropping and dramatically with nothing indicating that trend will not continue.
That leads us to the second rumor – shadow inventory. Shadow inventory is defined numerous ways, but the most common definition is homes that the banks have taken back and are holding off the marketplace. The banks in Arizona do not have some “secret stash†of houses they are holding back. Why can we state this as fact? The beautiful thing about real estate is that changes of ownership cannot occur in secret – they require a public recordation to transfer ownership. So this persistent rumor is more attributable to errors in counting and tracking foreclosures than anything factual.