WatchIt will take 46 months to clear the market’s supply of distressed homes, or the shadow inventory, according to estimates from Standard & Poor’s Rating Services based on first-quarter 2012 data.
The agency’s latest estimate came in one month shy of the liquidation timeline determined in the fourth quarter of 2011.
As we all know, the banks are trying their hardest to hold back the flood, but between 2011 and 2012, the amount of shadow inventory only dropped by ONE month. There's still nearly 4 years of supply out there! I'm guessing the banks will start allowing 3 years worth of squatting to prevent having to realize their losses, I should have bought in 2004, I would have stopped paying and saved nearly $200,000 in cash by squatting.
To put the shadows into perspective, S&P says this latest number, which is based on the original balances of the loans, represents slightly less than one-third of the outstanding non-agency residential mortgage-backed securities (RMBS) market in the United States.
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RentingForHalfTheCost says
For California, Foreclosureradar is one of the best, Gary Shilling uses them.
Shilling actually had interesting comments about the S&P report today, and inventories overall:
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bmwman91 says
I agree. Wasn't "RealtorsAreLiars" kicked off the forum once already?
Heck I'm a housing bear, but I grow sick of attempts to create "truth" through perpetual repetition.
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Found this recent article about the artificial low inventory
http://www.eforeclosuremagazine.com/foreclosure-market/banks-withholding-foreclosure-properties-to-boost-sales
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Well, it at least confirms what we all knew. I think this will actually hurt the housing recovery rather than help it, so the banks are shooting themselves in the foot with this strategy. But of course, these are the same banks who got us into this situation in the first place.
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Goran_K says
The homes being withheld aren't the homes you think they are. They are in Lathrop and Inland Empire and Bakersfield and Las Vegas and Florida. They aren't in the Bay Area.
I do bankruptcy for a living. I KNOW what percentage of distressed Bay Area properties are going to foreclosure auction. With a few exceptions that are primarily condos, the answer is ALL OF THEM.
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David9 says
What this looks like here on the ground is we went from last winter being the only bidder on properties that netted 10% cash on cash as rentals, to now I have yet to find any descent deals that don't have 4-5 offers in on it the day its listed and are going for 5-10% over list.
Purely speculation on my part, but with the low interest rates, election coming in Nov, real estate will stay artificially high until after Nov, then the market will cool as more foreclosure inventory compounds the rising interest rates, newbie investors will get a case of cold feet thinking they mis-timed the market, and we'll be back to naming our own price again through the winter.
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iwog says
We shall see. I think this is one of those questions that won't be answered in one month, or even three. Eventually the banks will have to realize the bad debt on its books. We'll chat in 20 years perhaps?
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gbenson says
Thanks for the heads up :) My 88 year old father mentioned the elections in November..
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When will the banks open up the inventory ?
OK, I am new and didn't trace every comment in this thread, but this subject is dear to my heart. I am looking for an income property and I see the banks are sitting on it, there are almost NO LISTINGS in Oakland area, where before there were many. It is an incredible drop off, and I think a lot of the reason is BIG TRACT SALES with private equity firms or other big investors. How long can the banks keep up this BS? With no mark-to-market reality being forced on them, will they wait forever? This is a farce to artficially keep prices high, and I fear most will believe it. I expect to hear all this great news about price recovery in a month or 2.
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OK, I see I missed some comments very relevant to my questions. My question to IWOG and others : isn't the new settlement here in CA going to get the banks motivated to start foreclosing right now? I know it will take many months to get the folks out, but they should be open to short sales now, no ? Reason being (I think) that foreclosure is now more expensive and time consuming then it used to be (the robo way.)
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Lafayette, CA
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hillychilly says
No. California is a non-judicial foreclosure state that uses a deed of trust instead of a mortgage. Robo-signing here did happen, but it was a formality that had no effect on the foreclosure process. Most banks in California did not voluntarily halt foreclosures like they did in other states. I think BoA might have been an exception, but it was a very short one.
Regardless of the very loud and vocal voices on this site claiming that the market is still declining, prices in California have gone SHARPLY higher in the last few months and in some cases the frenzy is very near 2005 levels. Banks have nothing to lose by dragging their feet.
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DanInSeattle says
There was some question last month, but there's no question today. This is the beginning of a large price spike that will rival the one in 2009 if not exceed it easily.
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There are 50 counties in California. Santa Clara is one of the largest. Which one do you want me to pick? How about Los Angeles?
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47 male
Lafayette, CA
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Here's my county:
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47 male
Lafayette, CA
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Here's the county you're pretending to live in:
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iwog says
OK, here is where your "spike" is coming from... Enjoy the viewing pleasure!!!
http://cbigs.s3-website-us-east-1.amazonaws.com/housing.jpg
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Lafayette, CA
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Call it Crazy says
I don't understand your logic. Banks are artificially restricting supply. Banks are still profitable. Banks can wait essentially forever.
How is this mystical shadow inventory supposed to crash prices again?
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iwog says
...and Banks are still foreclosing... where are the "new" buyers coming from to push up prices??
iwog says
Well, and how is this shadow inventory suppose to help INCREASE prices?? Having a vacant house rotting away on your block must do wonders for house values....
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DanInSeattle says
Nice Charts... actually supports what I said in another post. The charts show a small uptick for the Spring bounce like in previous years, but the overall trend line is down, and the "Spring bounce" isn't as big as in previous years.
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hillychilly says
Years. They can keep it up for years.
What will force them to cut the BS and start putting those homes on the market again will depend on a) the government and b) economic trends.
Essentially what our (US) gov. is trying to do is replicate what the Japanese have done with their economy following the big housing bust over there in the late 80's/early 90's and just drag things out for as long as humanly possible.
We won't really be able to pull that off since we don't have a trade surplus the likes of which they did but they're going to give it their best try since they're all out of ideas on how else to maintain the status quo.....for the rich that is.
Everyone else not rich will slowly be made poorer since someone has to be made to pay for these policies. What we now call the Great Recession may eventually be known as the Great Depression 2.0 in the future.
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robertoaribas's website
Price is a lagging indicator of market conditions. The laws of supply and demand don't lie, but home prices are slow to change in either direction.
In six months, we'll see if the conditions you guys report in many california markets (multiple offers, low inventory) have the same effect as what is happening in Phoenix: quick price increases.
Oddly, I made the same arguments on Patrick.net in 2006, and had people yelling "oh yeah, look prices aren't dropping" when inventory went skyhigh, and sales took a dive. time will tell, but I'm betting we see price increases in all market segments reporting those conditions.
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Laguna Beach, CA
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I hope you're wrong Robert. Prices in California are still so out of wack with incomes you have people on this board thinking 50% down is a normal situation to be able to get into a home. If prices actually rise in desirable California areas, you might just have to buy them 100% cash outright to make them affordable.
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Lafayette, CA
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Call it Crazy says
That's easy. The new buyers are the old buyers. They have served their 4 year long credit jail term and are anxious to buy homes at 50% off. The affordability index isn't a joke and it's not fake. More Americans can afford to buy a home right now than any time in decades.......as long as they have the credit.
Call it Crazy says
As I've said prior, the vacant decaying homes are grouped together by the thousands. They are in the California Central Valley, Inland Empire, Las Vegas, and Florida.
There aren't any vacant rotting homes on my street. None.
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iwog says
..and a job, but those are minor details to be overlooked....
iwog says
Plus thousands of other towns and cities across the country... which is why we HAVEN'T seen a bottom yet!!
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Call it Crazy says
No, they really aren't. The bubble affected prices everywhere, but the ghost towns are primarily in the Central Valley, the Inland Empire, Las Vegas, and Florida resort towns. THAT is where construction went insane and THAT is where the bulk of the empty properties are located.
It's not easy to quantify this on a graph, however if you want to assert there are large tracts of empty homes in Concord, Fremont, Los Gatos, Vallejo, or other middle class Bay Area cities, you'll have to show me where they are.
I've SEEN the ghost towns in Bakersfield, Lathrop, Inland Empire, and Las Vegas. Miles and miles where EVERY last home is vacant and banks don't bother listing them. I've also looked for them elsewhere, especially where I invest and do business.
They aren't there. Do you think you can find me one single block within a few miles of a BART station that is 25% or more vacant? I bet you can't. How about 10%? I doubt it. The market is hotter now than any time in the last 5 years yet inventory is crashing.
What is happening now is that inventory is dropping almost to zero along the pre-bubble suburban lines as people pull in from the outlying areas. Gas prices have a lot to do with this.
You're not going to see this trend reverse unless gas gets cheap again.
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this is proving i think to be a useful conversation, as long as i ignore the silly bickering. i am neither an agent nor a renter, just a small investor rying to figure out sfbay area and oakland. lying to myself or anyone will do no good. fact is, SF city proper in center is going up quickly. oakland most so-so areas are going up with crazy overbidding, at least for multi-unit properties. I have not been tracking sfr.
IWOG- where are you getting your data? Is it MLS-based ? I don't use zillow, I love the trulia interface but data is not reliable. I know things have picked up in the valley, but i am surprised by the shape of the curve.
also, i see your point about judicial but i did think the foreclosures dropped sharply here in ca. what about prices/rent ratios in :
brentwood, vallejo, or other ? do you have an insight into current situation?
I sure do see ga-ga behavior but cannot believe it will last. Remember, the banking profitability and stability is a facade enabled by the suspension of mark to market.
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I am somewhat disbelieving in the influence of gasoline prices on human behavior. yes, the the worst case scenario dodge ram mercen to pacific coast it is a huge factor.
tons of empty houses in oakland, but less than 5% i suppose.
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hillychilly says
The graphs are from redfin. Just use google and put in "county redfin" and you'll get sales data. Like any other data crawler, it's not 100% reliable but it's a great source of trends.
hillychilly says
It's probably a facade but since money itself is an artificial construct, and the federal reserve can make up whatever rules it wants to, this game could go on forever. It might even fuel a new real estate bubble and cause another crash.
Just remember that each time the banks are saved, the money supply is jacked up by trillions. That money doesn't disappear, it gets spent eventually and much of it will be spent on real estate.
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Not to jump into the fun between iwog and DanInSeattle, but if you look at the data in both graphs, and think about a recent post-crash trends on home buying for a moment, I would like to offer up a different theory (the gravitation to more 'reasonable' homes), which explains both graphs.
Note that price per sq/ft is higher on all of iwog's charts (sold listings - which rules out delusional asking prices), but also that sales price on Dan's charts is also steadily declining, but look at by how much (the relative difference between the 2 charts). Sales price declined by a much wider margin, and has recovered less than $/sq ft. I would submit that people are buying smaller, cheaper, more modest homes (plus you have the 'investor effect'). All else being equal, a 1BR home has a higher $/sqft than a 3BR, so if you sell more 1BR's the $/sqft will increase. Sell them at a higher price and you see sales price rising.
Talk to anyone actually buying houses if you don't believe realtors. Mcmansions are not selling particularly well unless they are very aggressively priced, but your basic 1,2 and 3BR shacks that are rentable or in a semi-ok neighborhood are flying off the proverbial shelves at the moment with multiple offers.
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Whoah. Better say something here. Shadow inventory. Who would do business with people that have a oh, established swindel like the stock market?
Remeber stocks HAVE NO ASSET ATTACHED.
A: Same people that started the "Federal" reserve.
B: Defies gravity in the face of a "blown out" Detroit
C: Defies gravity in the face of no more new building.
D: Blown out residential and CRE market.
Now discounting our friends. Who we could do ok doing business with. Theres more.
E: No inflation - indicators. Cars that cost 7 fold what they used to.
F: The old fixed basket of goods scam CPI. Like oh gas at 4 dollars a gallon now. Tomatos 3 dollars a pound etc.
No one ever stops to think once again these are the same fuckers that are the swindlers (owners) of the Federal Reserve. People in China and other countries sit and wonder how could they swindel us with MBS well look where they come from. They are SECURITIES. This is like oh, draining the guy that has more of any "cash" he might have gotten. Once again its not the paper but the labor. Even people with cash labor. Cash has one very exciting feature you can "run out" of cash. Another feature it has is this. Leaving you very impressed with their "empire" Corporation means to hide a robber barron or some skeevy queens assets so her drones can all look on in admiration. After all a Queens got her drones. Probably a word not used in some places. They all swap and trade and play all kinds of games. So we have one country. That bitch has 58 countries all through an interesting monetary system that was invented where said bitch lives. Guess what.
So supposedly they have "hidden" votes on the Federal Reserve. I guess by the orginal charter some banks are allowed to be secret. Another words what that would say is they don't have to disclose the chain of ownership of any bank on it thats the "real" bottom line. Americas a fucking farce. Anybody that believes the history of this place has shit for brains. Could be we are the armed to the teeth people of invasion for a really clever bitch and her family after all. Yer Goverment may not think so. However once again the borrower is the slave to the lender. So who really knows where the attack orders eminate from. Corporation upon Corporation. Robber barron buffers. Hysterical, historical propaghanda. Usury that always seems to find America no matter what. You want the real culprit in this look no further than your closest ALLIE.
Once again going on supposition that the borrower is the slave to the lender would make your government a slave to somebody after all now wouldn't it. Didn't say person. Of course you all get to bear that weight as individual borrowers of course. But then again what can your field hand of a Government do but listen and do. A borrower of course can be an entity thats where people get confused after all. So that said entity can be enslaved obviously. They can't make any decision off of what the "people" want and never do much to everyones frustration. They have to make all kinds of excuses even legal ones. People in the way etc. Because you don't have your "Government" the lenders do.
Of course well all have one voice and we can stop all of this. Hey just vote. The "Governent" they own in Washington. The borrower is the slave to the lender people. Will be more than happy to give us voice on all of the news outlets they own. The fast talking slick sociopaths that they have on places like CNBC and the like will be MORE than happy to tickle all of our ears with their latest scam to make us all feel better. Rockefeller you make a great lawn jockey or buffer for the people that really own this place. The Euro (duh) maybe We are but a small voice.
BUT WAIT
The people of the earth not just the United States have had enough. The revolts that are going on aren't commonplace things. Though they would have you think otherwise. They can try to thwart these. See these guys don't run the earth. They just think they do. When push comes to shove. They re-act as if you haven't noticed that. Their greatest fear is the everyday guy coming at them ready to do away with them. Swindlers deserve nothing less. Thing is they will never stop swindling as long as people put up with it.
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OWS AND FINANCIAL REFORM THIS IS SO FUCKING BORING. DO I LOOK LIKE A FUCKING TOURIST TO YOU? RON PAUL SEZ: DUH I THINK IS SAW ANOTHER SQUIRREL IS THAT YOU ROCKY? ROCKY THE SQUIRREL SEZ: I LANDED ON ROBBER BARRON. THE FACTS WILL ALL BE THE SAME ON ABC, CBS, AND NBC NIGHTLY NEWS OF COURSE WE ARE USED TO THAT. YOU CAN DEBATE IT OF COURSE. DOSEN'T MATTER YOUR STILL FUCKED. WHEN A USUOR GETS HIS HOOKS IN HE AIN'T LEAVING. ESPECIALLY WITH THEIR PILE OF ASSETS AND YOU STILL OWE. YOUR CHECK IS IN THE MAIL. TAKE IT TO THE SUPERMARKET AND SEE HOW FAST IT ALL GOES AWAY. ITS NOT ABOUT PAPER. ITS ABOUT HARD GOODS, ASSETS AND LABOR.
Artimus 7:11 Aren't these the same highly trained Alpha Delta Crapper monkeys that got draft deferments? Or I ALSO have a monkey called Aristotle. He's working for a higher rate of debt of course. Hes is an idiot. He will work for food. He has Professor Organ Grinder of course (Hey do you want a job in the "corporate world" or not?)Don't think they don't pull this shit all over the world. He is an expensive little monkey time and labor, wise. But hes also a debt slave. But hes always a workin' for the future. Easy to spot he loves the word FUTURE. Thats his deal.
Well he's tellin' us this
And he's tellin' us that
Changes it ev'ry day
Says it doesn't matter
Bases are loaded
And Casey's at bat
Playin' it play by play
Time to change the batter
Joe Walsh
Given the supposition that the usuors or debt merchants own every single medium of communication or is controlled by debt to reach everyone at once. Your not smart to believe what they flash up there at any given point. It's a closed game your not in it except as the "marks" they are trying to swindel and keep on the hook. Stay tuned and watch the sociopathic liars, make dizzy, goofy, senseless, idiots out of the "believers".
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Emeryville, CA
Purely anecdotal, but I've driven a lot of Oakland and it's weird. I see lots of homes with no curtains that appear to be empty, but no sign. The other day, the mail man was pointing out homes that had been empty for 2.5 years, and in the mid-hills.
I see prices in the hills being reduced (I know they could have been priced high) but when I check the sales data they were already priced much lower than they sold for during the bubble.
If there is such a shortage of supply, wouldn't that drive these prices up? Even irrationally?
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Los Angeles, CA
There is no doubt prices are going UP rapidly right now in desireable non ghetto, non ex urban areas.
My friend bought a short sale for 430k in january. Now same homes are selling (well a few of them) for 500k and now asking 550k. Its really nuts.
Remember we have a VERY VERY DIFFERENT environment from 2005/06 - we have 3% mortgages, we have (all permanent basicallly)
1. REITS,Hedgies,Small Time investors snapping up everything they can (who wants 1% on a CD? in 2005 it was like 7%)
2. Banks are taking 2-3 years to foreclose (massively reducing supply this is the shadow inventory)
3. Super low mortgage rates 3% range. Also HUD zero down and FHA 3.5% down payment fuels the fire.
You guys who voted for Obama got what you wanted he said before his election "We have to put a floor under house prices" and in fact they have. Enjoy!
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Ross, CA
CL says
Nice places priced right are moving quickly. The crap or stuff priced too high sits. We are at about 2002 -2003 prices.
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Ross, CA
Jerry says
he says as he quietly buys investment property...
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If the banks' accounting was even half straight, all the big ones would be toast.
Let's get with rational accounting again and take a long, satisfying piss on the face of a dead bank.
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Tarzana, CA
Here's another article from Realty Trac (May 1, 2012) about the fake housing recovery and low inventory:
http://www.realtytrac.com/content/news-and-opinion/bank-owned-property-inventory-withheld-by-lenders--bank-owned-homes-for-sale-7176
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Corning, NY
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APOCALYPSEFUCK is Tony Manero says
Hey now, let's not get too crazy. We all know that America is about power, money, and propaganda. Truth is the enemy.
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wthrfrk80 says
Remember George?
"Bullshit is the glue that holds America together".
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rowemoore says
These are the ones having a bidding war but are a small percentage of the overall inventory.
rowemoore says
And that is the whole rest of the inventory, a BIG chunk of it!!!