A decade ago, housing experts warned — incorrectly, it turns out — of a Tsunami of “shadow” inventory waiting to flood the then-moribund housing market, and drag prices still lower. See, “Barry Ritholtz Issues Mea Culpa on Housing.”
The source of all those homes?
Banks sitting on millions of foreclosures nationally.
Fortunately, it never happened: banks bundled their properties by the thousands and sold them, wholesale, to institutional investors (who subsequently turned them into rentals).
Meanwhile, climbing prices eventually rescued many previously underwater homeowners.
Fast Forward a Decade
Today, amidst an acute shortage of listings in the Twin Cities and elsewhere, there’s a different kind of shadow inventory afoot.
Namely, all the would-be Sellers whispering to agents they know (myself included) that they’d “be open to selling if they could net $ ______” for their home.
Their price is invariably at least 20% above prevailing prices.
I chalk it up as a side effect of housing’s (very) long-running bull market . . . 🙂