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Does Existing Inventory Include Foreclosures?

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    Foreclosure

    • Foreclosure is the legal process that a creditor uses to seize mortgaged properties that have gone into default on the loans. It occurs because mortgage loans require the debtors to secure them through putting up their properties as collateral. Should the debtors default on their debt obligations, the creditors can use foreclosure to claim the mortgaged properties and then sell them to attempt to recoup the debt.

    Inventory

    • Inventory is a term that can be used to refer to either goods and materials or a list that details those same goods and materials. Although inventory is most often used to refer to the products that a business intends to sell in order to produce its revenues, this is only one amongst many possible usages of the term. Inventory can also refer to specific goods and materials that entire industries and nations keep in their possession.

    Foreclosures In Relation to Inventories

    • Inventory, in relation to the real estate industry, refers to the list of homes that is available to a specific entity, whether that entity is a specific creditor or the entire real estate industry as a whole. Existing inventory, or existing home inventory, refers to the entire list of already built homes that are available for sale on the open market. When homes under foreclosure are put on the market for sale, those homes become part of the entire inventory for the industry.

    Foreclosures and Calculation of Existing Home Inventories

    • Existing home inventories include all pre-existing homes available for sale on the open market. For example, a newly-built house being put up for sale for the first time would not be counted under existing home inventory, but a house being put up for sale by its owners would be counted. In regard to foreclosed homes, it depends on what the creditors who have foreclosed do with them. If the houses are made available for sale, then they are counted under existing inventory. Otherwise, they are not.

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