The nation's so-called shadow inventory of properties in the foreclosure pipeline fell by more than 10 percent from 2.6 million housing units in July 2011 to 2.3 million housing units in July 2012, Irvine-based tracking firm CoreLogic reported this morning.
"Broadly speaking, the shadow inventory continued to shrink in July," said Anand Nallathambi, president and CEO of CoreLogic. "This is yet another hopeful sign that the housing market is slowly healing."
Alternatives to foreclosure, including short sales and loan modifications, along with the improving economy have helped shrink the number of homes entering the foreclosure pipeline. Meanwhile, banks have been slowly selling the homes that were already repossessed.
While the real estate market has generally been on a gradual path toward recovery this year, experts point to the vast shadow inventory as a potential threat to the upturn. Large numbers of foreclosed homes hitting the market could drive prices down.
CoreLogic calculates the shadow inventory by adding up the number of homes that are in foreclosure and those that are bank-owned but not yet for sale. Homes where owners are seriously delinquent in payments - 90 days or more past due - are also included in the figure.
All told, the shadow inventory in the U.S. was worth about $382 billion as of July, the firm estimated.
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