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Ok, Ok We Get The Inventory Thing – But What Is Lurking In The Shadows?

Posted on Thursday, September 27, 2012

Naples, Florida real estate inventories are back under seven months (All Naples Area, Sunshine MLS) demonstrating a much need improvement over just a couple of years ago. But what about the inventory the banks may be holding, that “shadow” inventory?” Our clients and readers often comment about “shadow” inventory that tough to estimate amount of real estate owned by banks and released into the market causing increased supply and potentially depressed prices. Let’s take a look at the concept this morning.
I think the most important thing to remember is the real estate market trades with the properties currently for sale – not what might come on the market for sale at some future point.  If one unit is for sale in a ten unit association and a buyer likes the unit the seller and buyer are going to negotiate price together – not with some third party who may or may not release additional troubled properties in the association at some future point.  Supply and Demand forces work with existing supply.

Are some buyers hesitant to buy because of possible shadow inventory releases? Sure. If a big wave of troubled properties were to hit the market, supply would rise and downward price pressures would result. We advise caution today especially after the turmoil of the last couple of years. With so much of the average Americans income tied up in real estate this is nothing to mess around with.
The average homeowner or resort property owner (investors aside) should look at the threat of shadow inventory but also remember they want to live here anyway. Waiting may or may not pan out. There is in fact some signs the shadow inventory risk is diminishing. Florida Realtor reported yesterday “Two reports – one that covers Florida and another focused on the U.S. – find that shadow inventory continues to decline (

I would also add a shadow inventory release is not always a bad deal for the consumer. We found a terrific four bedroom with a lake view for a client of ours yesterday and the offer is on the way. Bargains may present themselves (Duh!) when these trouble properties are released to the market.
The main point here – just keep watching the supply demand figures. Exercise caution with the threat of shadow inventory releases and remember markets and prices tend to be moved by what is actually trading in the market, especially over these last months in Naples.

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No legal, investment, or tax advice is being given in this Blog.  Consult with legal, financial and tax professionals before acting on any real estate transaction.  Actual real estate price and sales results are subject to market forces and are not completely predictable. The writings of this Blog are intended for the sole use of our clients.
Some of the data relating to real estate for sale on the website comes in part from the Broker reciprocity program of M.L.S. of Naples, Inc. The properties displayed here may not be all the properties available through the MLS reciprocity Program. This information is deemed reliable but is not guaranteed. Buyers and sellers are responsible for verifying all information about their purchase prior to closing.
Mark Goebel, PA is a REALTOR with Coldwell Banker on 5th avenue in Naples, Florida with 35+ years of visiting and living in Naples. After 25 years at Accenture, Mark retired as a managing director and spends his time helping non profits and building a Naples real estate team with his wife Nan. Talk to Mark and Nan about life in Naples and why they chose this place to live full-time over all others and enjoy Naples real estate.
Mark Goebel, PA
REALTOR Coldwell Banker 5th Avenue South
Mobile: 239.595.3921
Facebook: NaplesBestAddresses