Thanks to the massive foreclosure slow-downs brought on by last fall’s robo-signing fiasco, the shadow inventory is still, well, lingering in the shadows and bringing down the housing market, reported Lawrence Yun, the National Association of Realtors (NAR)’s chief economist today[1]. Yun cited this pervasive shadow inventory as a major reason that the housing market has not yet recovered even though other aspects of the economy are stirring and showing signs of life. Yun addressed the commercial market’s relatively superior recovery by pointing out that a lack of construction in that sector has “essentially fixed the supply of available space… [meaning] vacancy rates could fall quickly from any increase in demand”[2]. Thanks to the shadow market in the residential sector, however, the glut of available space is so great that movement in this arena is likely to remain sluggish and demand is likely to remain low.

With the entire residential market still hanging on many factors like rulings dealing with robo-signer-plagued banks and legislation to handle how foreclosures must be processed in the future, it seems unlikely that the shadow market will come out of the shadows any time soon. Do you think that this will permanently change the face of residential real estate in this country?

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[1] http://www.ibtimes.com/articles/117045/20110228/housing-shadow-inventory-real-estate.htm

[2] http://www.consumeraffairs.com/news04/2011/02/will-2011-be-the-year-of-the-real-estate-rebound.html