by Calculated Risk on 8/10/2009 03:10:00 PM

From Crain's New York: Shadow units cast pall (ht Nick)

... In Manhattan in the first quarter, [condo] sales were halved from year-earlier levels even as more apartments flooded onto the market, leaving it choking on an 18.6-month supply of units. ...

As bad as those figures look, they may actually overstate the health of the market. Industry experts point to a growing mountain of so-called shadow inventory that is not reflected in the data. This includes units that are held by developers in soon-to-be completed buildings, as well as those kept off the market by banks and by individual owners who are waiting for conditions to improve before they tack up “For Sale” signs.

“We are undercounting the housing stock,” says Jonathan Miller, chief executive of appraisal firm Miller Samuel Inc. ... In a report on Manhattan residential real estate this spring, Mr. Miller estimated that in addition to the 10,445 condominiums that showed up in unsold inventory, there were as many as 7,000 shadow units.

There are plenty of details in the article. This shadow inventory is a significant issue, especially in areas with high rise condos.

Just a reminder - the Census Bureau new home inventory report does not include high rise condos, so if these units are not listed, they are not counted anywhere.