In late November of 2011, we analyzed the shadow inventory in Fairfield County, and saw that there were 10,229 properties that were currently "in-stage" or somewhere in the process of foreclosure.
As of this morning, that number is still very high. There are 9,957 properties looming in shadow inventory, and this figure is down only 2.7 percent countywide. In fact, there were four towns that have an increase in properties that made the list. Interestingly enough, they are NOT cities and they also border one another. The towns with increased delinquencies are Easton, Monroe, Newtown and Redding.
If you are unfamiliar with the term "Shadow Inventory" it refers to the houses that will be on the market predominantly due to one of the following: they are pending foreclosure, homes that have already been foreclosed and not yet sold, properties that are caught in the clogged foreclosure process, and lastly- and this is the uncertain number with no way to track, are homes that owners are delaying putting on the market until prices improve. Pending divorces, and estate properties where the homes will have to be sold are also not included in our list below.
Shadow inventory creates uncertainty about the best time to sell (for owners) and will dictate when a local market can expect full recovery.
None of this even takes into account the homes that were listed on the market and didn't sell during the listing contract, and those homes will also come back on the market at some point, too.
There are approximately 2.3 million houses for sale nationwide, and that represents a quite significant 20 percent decline from last year. We can look at that two ways- One -that the absorption rate has increased exponentially, and/or Two- homeowners are waiting to sell until prices get better. Either way, or any combination of both does signal good news for the market, as a glut of available properties for sale would only hurt prices further. However, the fact remains that the pending Shadow Inventory WILL put a damper on a timely real estate market recovery.
According to the GFC-CMLS, which may have up to a 30-60 day delay in reporting, there are currently over 10,200 properties in distressed status in Fairfield County alone, while less than 800 are bank owned. That's an awfully large backlog of properties that is going to take some time to sell.
The hardest hit areas in the twenty three towns and cities in Fairfield County continues to be its four most populous communities. Bridgeport, Stamford, Norwalk and Danbury comprise over 6,200 or nearly 63 percent of the looming inventory, and while the total number is down by about 200 properties, the percentage of homes in these communities is not. The town of Stratford has also emerged this year with the 5th highest rate with 781 properties in stage, or bank owned.
Still troubling is that just under 800 properties are showing current ownership by banks or financial institutions, and that has increased by about 200 properties since late November. It appears that we have a long, long way to go before this gets corrected and the market can return to some state of normalcy.
The Fairfield County towns with the fewest foreclosures and amount of Shadow inventory in the wings are Sherman, *Easton, *Redding and Darien with a four town total of 228 properties either in some stage of foreclosure or bank owned. NOTE:*Easton and *Redding are showing increased delinquencies over the past few months, but still have fewer properties on the list.
The fact that so many of these homes have not even hit the market yet is cause for concern over the next few years. Even though interest rates are still at all time lows, and credit requirements have begun to loosen, albeit so minimal that it may not even be worth mentioning, the harsh reality is that these current conditions of the real estate market are not leaving us anytime very soon, and unfortunately may, in fact get just a little worse before it gets better.
And a note From Judy: If you have a question about buying or selling Real Estate in Fairfield County, and are in need of an Realtor to represent you, I invite you to contact me, and if you have an idea for a topic that you would like to see on The CT Realty Blog, please include it in the "Post a Comment" section link below this post. We appreciate the feedback and look forward to providing you with the best real estate content, advice and service in Fairfield County, Connecticut.