Nearly 1.2 million bank-owned properties and troubled mortgages faded from the nation’s shadow inventory during the first half of 2012, according to research from JPMorgan Chase, HousingWire reported Sept. 24.
Chase analysts predicted that the decline in shadow inventory could double by the end of the year; however, their research showed that more than 4 million loans and properties would continue to plague the housing industry — still a significant decrease from a peak of 6 million in 2010.
Chase noted that servicers could sell more than 950,000 foreclosed homes and an additional 670,000 properties through short sales by the end of the year, HousingWire reported.
According to Chase, estimates on shadow inventory vary based on the delinquency of a loan; Chase’s estimates include loans that are at least 60 days past due.
“Although re-defaults and new delinquencies will continue to keep shadow inventory elevated, the rapid decline should prevent downward pressure on home prices going into 2013,” Chase analysts noted, HousingWire reported. “Combined with better existing home sales, investors have reason to be optimistic about running recovery scenarios.”
If home prices increased another 10 percent, Chase analysts estimated that the number of underwater borrowers could drop from 10.8 million to 9 million.