Fitch forecasts foreclosure inventory to last until March 2014 when 7 million properties currently in default will enter the market either as homes or investments.
With hundreds of thousands of properties being foreclosed upon each month, there is a massive amount of shadow inventory that hasn't even hit the real estate market yet. And with tightened foreclosure regulations, it will be years before the backlog is unclogged.
As the shadow inventory is put on the market, it is likely going to have some effect on the price of homes for some time to come. Some experts think that the current stash of shadow inventory will take almost three years to clear up if buying rates stay the same as they are now.
There are foreclosures hiding in the wings and not appearing on the main stage – this is the shadow inventory. But ultimately they will have to hit the market and then at a minimum it will take three years to clear up the mess.
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