by Calculated Risk on 8/13/2009 12:35:00 AM

Jim doesn't think much of this deal ...

by Calculated Risk on 8/12/2009 07:13:00 PM

Here is some national data on the number of distressed sales in Q2, and the types of homebuyers. This is from a survey by Campbell Communications (excerpted with permission).

Source: Summary Report--Real Estate Agents Report on Home Purchases and Mortgages, Campbell Communications, June 2009

Click on graph for larger image in new window.

The Campbell survey broke REOs down into damaged and move-in ready.

According to this national survey of real estate agents, over 63% of sales were distressed sales in Q2. This is higher than the numbers reported by NAR. From NAR:

Distressed properties ... accounted for 31 percent of sales in June ... Distressed properties, which declined to 33 percent of all sales in May from 45 percent in April ...

The Campbell numbers seem high to me. In Sacramento over 70% of sales in June were distressed, and I'd expect that area to well above the national level. But the NAR numbers seem low.

The second graph breaks out sales by buyer type.

According to the Campbell survey over 70% of sales in Q2 were to first-time buyers and investors.

Although we don't have historical data for distressed properties - or buyer types - this does suggest a market that is far from normal with few move-across or move-up buyers.

by Calculated Risk on 8/12/2009 04:39:00 PM

From California AG Jerry Brown: Brown Orders Mortgage Foreclosure Consultants to Post $100,000 Bond or Face Prosecution (ht Matt at O.C. Register)

Threatening possible criminal and civil prosecution, Attorney General Edmund G. Brown Jr. today ordered 386 mortgage foreclosure consultants to post $100,000 bonds and register with his office.

He also ordered more than two dozen companies to justify suspicious loan modification claims made in "slick advertising," online and through the mail.
...
Brown has sent letters directing 386 mortgage foreclosure consultants to register with his office within 10 days and post $100,000 bond, or demonstrate why they are not required to. If the consultants are required to register and have failed to do so, they are subject to criminal penalties of up to a year in jail and fines ranging from $1,000 to $25,000 per violation. Eighty-five of these consultants are based in Los Angeles County, 133 in Orange County, 47 in the Inland Empire, 68 in San Diego County and seven in the Bay Area.
...
The State Bar of California today announced that it has obtained resignations from two lawyers and filed charges against a third for their loan modification activities.

And check out some of this advertising that Brown demanded loan consultants substantiate:

· Brown directed Irsfeld, Irsfeld & Younger, LLP as corporate counsel for JL Richman, doing business as Home Retention Programs of Glendale, Calif. to substantiate its claims including: "Our team has 10 years of success in negotiating 90% of all mortgage loan modification requests to a successful outcome….For the modification requests we accept, our modification failure rate is less than 1%."

· Brown directed 21st Century Real Estate Investment Corporation of Rancho Cucamonga to substantiate its written solicitations including: "[y]our proposed loan modification is a 30 year fixed/3.5% interest rate with a monthly payment of $495. Your monthly savings is $705. Total savings over a 30-year period is $253,800. . . . Your first payment will be negotiated to begin March 2009 - payable to your current lender for $495."

· Brown directed Mortgage Modification Solutions of Irvine to substantiate its claims including: "Our services are due to the FEDERAL MANDATE which makes it mandatory for mortgagees, upon the default of a single family mortgage, to engage in loss mitigation actions" and "Why $3995.00 is nothing compared to what you can accomplish in return? #1- It's 10 times more expensive to hire a CPA or a Financial Advisor to exclusively analyze & Research your financial affairs to create a plan acceptable to the Banking standards."

· Brown directed Alliance Law Center of San Diego to substantiate its letters to consumers stating: "Final Notice: 3/11/09, our review of certain information indicates you may be a victim of federal disclosure violations and/or predatory lending violations, therefore your loan may be invalid, and you may qualify for a loan modification saving you thousands of dollars."

The tips on avoiding scams can't be repeated enough.

by Calculated Risk on 8/12/2009 02:15:00 PM

From the FOMC:

Information received since the Federal Open Market Committee met in June suggests that economic activity is leveling out. Conditions in financial markets have improved further in recent weeks. Household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing but are making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve is in the process of buying $300 billion of Treasury securities. To promote a smooth transition in markets as these purchases of Treasury securities are completed, the Committee has decided to gradually slow the pace of these transactions and anticipates that the full amount will be purchased by the end of October. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
emphasis added

by Calculated Risk on 8/12/2009 01:08:00 PM

I just reread the previous Fed statement to refresh my mind on a few key sentences. Here is the statement from the June 24th meeting.

On the Fed funds rate, I expect no change to this sentence: "The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period."

But I expect some changes to the economic conditions paragraph. The key phrase last month was "the pace of economic contraction is slowing", and it will be interesting to see if the Fed sees the end of contraction now.

As I noted last week, the $300 billion program to buy Treasury securities is almost over, so there will probably be a comment on this program. More in an hour ...

by Calculated Risk on 8/12/2009 10:00:00 AM

Just using Sacramento as an example ... I wish the NAR broke out the data like this!

Click on graph for larger image in new window.

The Sacramento Association of REALTORS® is now breaking out monthly resales by equity sales (normal resales), and distressed sales (Short sales and REO sales). Here is the July data.

They started breaking out REO sales last year, but this is only the second monthly report with short sales. Over two thirds of all resales (single family homes and condos) were distressed sales in July.

Total sales in July were off 7% compared to July 2008; the second month in a row with declining YoY sales.

The second graph breaks out sales by financing type for each July since 2002. (July 2004 was missing, June was used).

This shows the significant shift to FHA loans and cash buyers (usually investors). Speculators used conventional loans during the bubble, but now cash flow investors are mostly buying with cash.

This suggests most of the activity in distressed bubble areas like Sacramento is first-time home buyers using government-insured FHA loans (and taking advantage of the tax credits), and investors paying cash.

Investors and first-time home buyers will be buying mostly in the low-to-mid priced areas. Inventories are down in the low priced areas, but with 67% distressed sales, there will be few move-up buyers for the higher priced areas.

by Calculated Risk on 8/12/2009 08:30:00 AM

The Census Bureau reports:

The ... total June exports of $125.8 billion and imports of $152.8 billion resulted in a goods and services deficit of $27.0 billion, up from $26.0 billion in May, revised. June exports were $2.4 billon more than May exports of $123.4 billion. June imports were $3.5 billion more than May imports of $149.3 billion.

Click on graph for larger image.

The first graph shows the monthly U.S. exports and imports in dollars through June 2009.

Imports were up in June, mostly because of a spike in oil prices. Exports also increased in June. On a year-over-year basis, exports are off 22% and imports are off 31%.

The second graph shows the U.S. trade deficit, with and without petroleum, through June.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Import oil prices increased to $59.17 in June - up about 50% from the prices in February - and the fourth monthly increase in a row. Import oil prices will rise further for July and August.

It appears the cliff diving for U.S. trade might be over - especially for U.S. exports.

by Calculated Risk on 8/11/2009 11:48:00 PM

From the WSJ: Feeling Roomy, J.P. Morgan Shops Its Space (ht BR)

J.P. Morgan Chase & Co. is marketing 23 office properties ... with a combined 7.1 million square feet of space, includes four notable towers: One Chase Manhattan Plaza, near Wall Street; Four New York Plaza, also in the Financial District; the former headquarters of Washington Mutual in a downtown Seattle skyscraper that also houses the city's art museum; and a landmarked 1929 Art Deco building in Houston, the former headquarters of Texas Commerce Bank.

The portfolio is believed to be the largest single portfolio of office properties to hit the market this year and could raise more than $1 billion.

JPMorgan acquired most of this office space as part of recent acquisitions.

And a great quote:

"Vacant space right now is not ideal," said David Aubuchon, an analyst with Robert W. Baird & Co. ...

No kidding! Not in a period with rapidly rising office vacancy rates.

Note: Aubuchon is comparing to a few years ago when vacant space was considered valuable by some CRE investors under the assumption that rents would increase sharply.

by Calculated Risk on 8/11/2009 10:32:00 PM

From Bloomberg: Blackstone, U.S. Bancorp, Ford May Bid for Ailing Guaranty Bank

Blackstone Group LP, Gerald Ford’s Flexpoint and U.S. Bancorp are considering bids for assets of Guaranty Financial Group Inc., the Texas lender that said last month it will probably fail, people familiar with the situation said.
...
Guaranty, whose backers include billionaire Carl Icahn and Omni Hotels owner Robert Rowling, would be the biggest bank to collapse this year and the largest failure since the seizure last September of Washington Mutual Inc.

Soon.

And on Colonial Bank from The Birmingham News: Alabama State Banking Board meets; can't say if Colonial Bank a topic

A meeting of the Alabama State Banking Board that was to be held Wednesday regarding the future of Montgomery-based Colonial BancGroup has been canceled.

The board met on Monday, said Elizabeth Bressler, general counsel for the Alabama State Banking Department. Under Alabama law, she said she could not comment on what happened at that meeting or whether it involved Colonial.

Guaranty, with over $14 billion in assets, will probably not be the largest bank to fail for very long. Colonial had over $26 billion in assets according to their most recent filing.

Corus only has about $7.6 billion in assets.

by Calculated Risk on 8/11/2009 07:23:00 PM

From ForeclosureRadar: Record Number of Foreclosures Scheduled For Sale

[F]oreclosure stats were mixed, with Notice of Default filings flat, Notice of Trustee Sale filings rising by 31.6 percent and foreclosure sales dropping 22.7 percent. The number of properties scheduled for foreclosure sale – new Notices of Trustee Sale minus those sales that have cancelled or sold – rose to a record level ...

Foreclosures scheduled for sale rose to 124,874, a 10.4 percent increase from the prior month, and a 93.3 percent increase year-over-year from July 2008. The year-over-year increase is significant given that foreclosure sales in July 2008 set a record that has not again been reached. The increase appears to be primarily due to the fact that lenders are willingly postponing foreclosure sales.
...
Political pressure, financial incentives and the postponement of sales awaiting the completion of loan modification trial periods are likely reasons for the delays. The vast majority of foreclosures, 72 percent, are postponing either due to lenders request, or mutual agreement between the lender and borrower.

The average California foreclosure has a total loan balance of $425,134 on a home that is now worth $236,739.

Whether or not there is a flood of foreclosures soon appears to depend on the loan mods. Notice that foreclosures remain pending during the loan mod trial period - so it is possible that the lenders will start cancelling many of these 'Notices of Trustee Sale' soon if the mods are successful.

by Calculated Risk on 8/11/2009 05:23:00 PM

From the WSJ: Bankruptcy Filing Near for Taylor Bean

A bankruptcy filing is "imminent" for Taylor, Bean & Whitaker Mortgage Corp., lawyers representing the mortgage lender said in a federal court filing last week.
...
Meanwhile, an internal email at Taylor Bean dated Monday, Aug. 10, referred to a new computer folder "to assemble all of our bankruptcy detailed spreadsheets and support."

No surprise.

Nothing new on Colonial Bank (or Corus Bank, or Guaranty Bank in Texas).

CIT created a little stir this morning with an NT 10-Q SEC filing. This was just a notice of CIT being unable to file on time - because the executives are busy - and that CIT expects to file by August 17th (just happens to be the date of the cash tender offer).

CIT reiterated in the NT 10-Q that:

If the tender offer is successfully completed, the Company intends to use the proceeds of the Credit Facility to complete the tender offer and make payment for the August 17 notes. Further, the Company and a Steering Committee of the bond holder lending group do not intend for the Company to seek relief under the U.S. Bankruptcy Code, but rather will pursue restructuring efforts as part of the comprehensive restructuring plan to enhance the Company’s liquidity and capital position. If the pending tender offer is not successfully completed, and the Company is unable to obtain alternative financing, an event of default under the provisions of the Credit Facility would result and the Company could seek relief under the U.S. Bankruptcy Code.
emphasis added

That isn't new.

CIT also reiterated that there are substantial doubts that the company will continue as a going concern.

In addition, as disclosed in the same Current Report on Form 8-K, the Company’s funding strategy and liquidity position have been materially adversely affected by on-going stress in the credit markets, operating losses, credit ratings downgrades, and regulatory and cash restrictions such that there is substantial doubt about the Company’s ability to continue as a going concern.

Also nothing new.

by Calculated Risk on 8/11/2009 03:23:00 PM

From the Treasury:

... One of the most significant changes in the world of finance in recent decades has been the explosive growth and rapid innovation in the markets for credit default swaps (CDS) and other OTC derivatives. These markets have largely gone unregulated since their inception. Enormous risks built up in these markets – substantially out of the view or control of regulators – and these risks contributed to the collapse of major financial firms in the past year and severe stress throughout the financial system.

Under the Administration's legislation, the OTC derivative markets will be comprehensively regulated for the first time. The legislation will provide for regulation and transparency for all OTC derivative transactions; strong prudential and business conduct regulation of all OTC derivative dealers and other major participants in the OTC derivative markets; and improved regulatory and enforcement tools to prevent manipulation, fraud, and other abuses in these markets.

It appears the proposed bill would require standard derivative products to be traded on exchanges, and that all companies involved in derivative trading would be subject to federal regulation.

I haven't found any mention of banning 'naked' CDS (something that was discussed a couple weeks ago), but I haven't read the entire proposal.

by Calculated Risk on 8/11/2009 12:41:00 PM

From CB Richard Ellis: U.S. Retail Cap Rates

Average US retail capitalization rates increased 55 basis points in the 2nd quarter of 2009 to 8.12% ...

As some owners were unable to hold on, cap rates continued the upward march in the 2nd quarter. The 55 basis point gain is the largest quarterly increase we have ever measured, even trumping 2008 Q4. ... Our preliminary review of closed sales and escrows in the 3rd quarter indicate cap rates are continuing to rise.

Click on graph for larger image in new window.

This graph from CBRE shows the retail cap rate since 2003. Note that 2009 was based on just Q1 and Q2, and Q2 is already at 8.12% - and CBRE sees an additional cap rate increase in the early Q3 data.

From Reuters in July, see: Strip Mall Vacancy Rate Hits 10%, Highest Since 1992

During the second quarter, the vacancy rate at U.S. strip malls reached 10 percent, the highest level since 1992, [Reis] said. ... asking rent fell 1.7 percent from a year ago to $19.28 per square foot. Asking rent fell 0.7 percent from the prior quarter. It was the largest single-quarter decline since Reis began tracking quarterly figures in 1999.

Sharply lower rents, higher vacancy rates, reduced leverage and much higher cap rates - Brian calls this the "neutron bomb for RE equity"; destroys CRE investors, but leaves the buildings still standing.

by Calculated Risk on 8/11/2009 10:30:00 AM

Saturday I posted a description of the differences between the Current Population Survey (CPS: commonly called the household survey), and the Current Employment Statistics (CES: payroll survey).

The CPS gives the total number of people employed (and unemployed), and the CES gives the total number of positions (excluding some categories like the self-employed, and a person working two jobs counts as two positions).

So if you wanted to compare the number of men vs. the number of women in the labor force, which survey would you use? Not the CES because that is a measure of positions, and a person working two jobs would be counted twice. Instead you'd want to use the CPS (a count of people, not positions).

However, Professor Casey Mulligan writes in the NY Times Economix: When Will Women Become a Work-Force Majority?

It is possible that, for the first time in American history, women will make up a majority of the labor force late this summer.
emphasis added

Uh, no.

First Mulligan means "work force" or "employed", not percent of labor force (the labor force includes unemployed workers too).

But more importantly, Mulligan means women will hold a majority of the positions as measured by the CES. Remember the CES excludes self-employed and farm jobs, and those are probably largely male. And perhaps women are more likely to work two jobs (the CES counts that as two positions).

Click on graph for larger image in new window.

This graph shows the percent of men and women in the U.S. labor force. The percentage have been pretty stready for the last 15 years, although the current recession is impacting men more than women.

According to the BLS, there are 10.1 million more men in the labor force than women, but only 7.4 million more men are working.

The unemployment rate for men (20 & over) is 9.8% compared to 7.5% for women. Including teens (16 & over), the unemployment rate for men is 10.5% compared to 8.1% for women.

Catherine Rampell at the NY Times Economix picks up Mulligan's error: The Mancession

Casey B. Mulligan noted, for example, that for the first time in American history women are coming close to representing the majority of the national work force.

At least Rampell used "work force" instead of "labor force" but she repeats Mulligan's error. Women are coming close to holding a majority of payroll jobs, but not a majority of the work force or labor force. Back in February, Rampell phrased it better:

With the recession on the brink of becoming the longest in the postwar era, a milestone may be at hand: Women are poised to surpass men on the nation’s payrolls, taking the majority for the first time in American history.

To belabor this point: Say there were 50 women and 100 men in the work force, and each women worked two jobs (men only one). The CES would report 200 payroll positions; half for men, and half for women. The CPS would report 150 people had jobs, 50 women and 100 men. Would it be correct to say there were as many women in the work force as men? No.

Both surveys have value, and I'm using this to make a point: The CES is about positions. The CPS is about people.

by Calculated Risk on 8/11/2009 08:38:00 AM

From MarketWatch: Oversight panel: Losses could pose threat to small banks

According to a report from the Congressional Oversight Panel, which is charged with overseeing the $700 billion Troubled Asset Relief program, or TARP, the 18 largest financial institutions with over $600 million in assets would "be able to deal with" whole-loan portfolio losses.

However, the report's analysis of troubled whole loans -- based on a model developed by SNL Financial -- suggests they pose a threat to smaller public banks, those with $600 million to $100 billion in assets.

Here is the report: August Oversight Report: The Continued Risk of Troubled Assets

The problem of troubled assets is especially serious for the balance sheets of small banks. Small banks‘ troubled assets are generally whole loans, but Treasury‘s main program for removing troubled assets from banks‘ balance sheets, the PPIP will at present address only troubled mortgage securities and not whole loans. The problem is compounded by the fact that banks smaller than those subjected to stress tests also hold greater concentrations of commercial real estate loans, which pose a potential threat of high defaults. Moreover, small banks have more difficulty accessing the capital markets than larger banks. Despite these difficulties, the adequacy of small banks‘ capital buffers has not been evaluated under the stress tests.
emphasis added

The FDIC will stay very busy.

by Calculated Risk on 8/10/2009 11:58:00 PM

From HotelNewsNow.com: HIP increases by 1.6 in July; first sign of turning point

This morning, economic research firm e-forecasting.com, in conjunction with Smith Travel Research, announced that after 19 months of consecutive decline, HIP climbed 1.6 percent in July. HIP, the Hotel Industry’s Pulse index, is a composite indicator that gauges business activity in the US hotel industry in real-time. The latest increase brought the index to a reading of 82.2. The index was set to equal 100 in 2000.
...
“With HIP finally showing a slight improvement after 19 months of decline, it appears we may be seeing the light at the end of the tunnel” said Chad Church, Industry Research Manager at STR. “It will be important to monitor the pace of growth in the HIP over the second half of the year to see if July was an anomaly or a true turning point in this recession.”
...
The composite indicator is made with the following components: revenues from consumers staying at hotels and motels adjusted for inflation, room occupancy rate and hotel employment, along with other key economic factors that influence hotel business activity.

Click on graph for larger image in new window.

This index suggests that the cliff diving for the hotel industry might be over, although this is just one data point.

Over the last couple of years the hotel industry has been crushed. RevPAR (Revenue per available room) is off over 15% compared to the same period in 2008. And at the current occupancy and room rate levels, many hotels are losing money.

The end to cliff diving is not the same as new growth, but it is better than more cliff diving!

HIP historical data provided by HotelNewsNow.com and e-forecasting.com.

by Calculated Risk on 8/10/2009 09:35:00 PM

From the WaPo: Stimulus Funds Bring Relief to States, but What About 2010?

As states across the country grapple with the worst economy in decades, most have cut services, forced workers to take unpaid days off, shut offices several days a month and scrambled to find new sources of revenue.

The good news is that much of the pain this year has been cushioned by billions of dollars of federal stimulus money, which has allowed states and localities to avoid laying off teachers, prison guards, police officers and firefighters.

The bad news is that for the next fiscal year, beginning in July, the picture looks even bleaker. Revenue is expected to remain depressed, even if the national economy improves. There will be only half as much federal stimulus aid available, and many states have already used up their emergency reserves.

The article discusses the budget situations for a number of states. But here is a little positive news from California State Controller John Chiang today:

... When adjusting for Registered Warrants issued on personal income and corporate tax refunds, General Fund Revenue was 8% below July 2008. However, the pace of deterioration has slowed considerably relative to the 39.4%, 39%, and 17.7% deterioration in March, April, and May, respectively.

This slowing decline can be attributed to several factors ... First, the Governor signed a bill in October that imposes a 20% understatement penalty on corporate tax. Companies were given the option to avoid the penalty by filing an amended return and paying their actual tax liability by May 31, 2009. As a result, corporate taxes saw sharp increases as firms took action to avoid the penalty.

Second, the sales tax rate was increased on April 1 from 7.25% to 8.25%. This has helped to bolster the sales tax revenues collected by the State, which were up 20.8% from last July. Another policy change that has had a positive impact on California’s sales tax collections is the Federal Government’s “Cash for Clunkers” program. ... This program has been successful in boosting demand for new automobiles, and thus, generating additional tax revenues for California. Although this positive indicator is driven by economic incentives created by policy changes in Washington D.C. more than a genuine rebound in consumer activity, any encouraging signs in the economy were virtually nonexistent six months ago.

by Calculated Risk on 8/10/2009 06:11:00 PM

On Saturday I posted a graph and some analysis of Housing Starts and the Unemployment Rate

Today I received a request for a similar graph of auto sales and the unemployment rate.

Click on graph for larger image in new window.

This graph shows light vehicles sales including SUVs and small trucks, and the unemployment rate (inverted - see right scale).

Light vehicle sales usually bottom sometime before the unemployment rate peaks - just like for housing starts. This makes sense since the usual two engines of recovery are housing and personal consumption. See Business Cycle: Temporal Order

by Calculated Risk on 8/10/2009 04:20:00 PM

Click on graph for larger image in new window.

Instead of comparing the markets from the peak (See: the Four Bad Bears), Doug Short sent me this new graph matching up the market bottoms (with an interim bottom for the Great Depression).

Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.

Doug has probably jinxed the market!

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.