Morgan Stanley just released a housing finance report detailing their findings on what is 
called the “Shadow Inventory” of homes. These are the properties that have yet to move into the foreclosure process, but typically haven’t made it there yet due to backlogs.
They believe close to 8,000,000 homes are currently part of this backlog and that it could take 47 months (that works out to one month shy of FOUR YEARS!!) before they would be all cleared off the market.
Would you honestly expect housing values in the US to reach any stable footing with this many properties expected to be released on the market at typically pennies on the dollar? The foreclosure rules are substantially different in the US than they are in Alberta and is another reason why it is so great being here!
Just for some comparison, it does mention at the bottom that Barclay’s Capital feels there is only 4,700,000 million properties in the shadow inventory and Capital Economics believes it’s only 5,500,000. However you look at it, that is still a mess of foreclosure properties that will ultimately affect values for at least two more years to come.
So before you plunk down your hard earned cash on that “great investment property” in Phoenix, think about what it may be worth in two years!
