Definition of Shadow inventory:
Shadow inventory played an important role in the aftermath of the subprime mortgage meltdown of 2007-2008. With the unprecedented number of foreclosures stemming from the housing market collapse during that crisis, lenders were left with significant real estate holdings. Many lenders were slow to put their inventory up for sale for fear of flooding the market with so-called "distressed" properties. Since distressed properties sell for relatively little, more of them on the market drives down prices, which in turn lowers lenders' potential ROI. After the 2007-2008 crisis, however, shadow inventory has thinned out as the housing market has slowly recovered. .
Housing units that are not yet put into public market. Shadow inventory includes foreclosed houses that are not put to sale since real estate prices are still low. This creates uncertainty on when is the best time to sell since the shadow inventory causes the actual number of housing units in the market to be understated.
Shadow inventory refers to uninhabited or soon-to-be-unininhabited real estate that that has yet to be put on the market. It's most often used to indicate properties that are in foreclosure but have not yet been sold, but it also encompasses homes that owners are waiting to put up for sale until prices improve. Shadow inventory can create uncertainty about the best time to sell and about when a local market can expect full recovery. In addition, shadow inventory often causes reported housing data to understate the actual number of properties on the market.
Meaning of Shadow inventory & Shadow inventory Definition