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Low inventory showing the bottom? Nope, S&P shows 46 months of "Shadow"


By Goran_K   Follow   Mon, 14 May 2012, 2:05am PDT   16,706 views   184 comments   Watch (0)   Share   Quote   Permalink   Like   Dislike (1)  

http://www.dsnews.com/articles/shadow-inventory-update-46-months-to-clear-supply-of-distressed-homes-2012-05-14

It 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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GUAB   befriend   ignore   Mon, 14 May 2012, 2:06am PDT   Share   Quote   Like   Dislike     Comment 1

That sucks :(

Good thing we're not dealing with that here in Phoenix.

Goran_K   befriend   ignore   Mon, 14 May 2012, 2:08am PDT   Share   Quote   Like   Dislike (1)     Comment 2

You can actually buy homes in Arizona below what they cost before the bubble. Now if only other places could follow Phoenix's example.

Goran_K   befriend   ignore   Mon, 14 May 2012, 2:14am PDT   Share   Quote   Like   Dislike (1)     Comment 3

E-man says

I thought some report last year mentioned that the shadow inventory was more like 10 years. That's a huge difference between 4 years and 10 years.

Learn from your victory. Prosper from your failure.

No, that's simply not accurate. Do you really think the banks cleared 6 years of shadow inventory since 2011? Doesn't even make sense considering sales numbers are down YOY.

Last year it was 52 months in January 2011, then revised to 47 months by August. So things have only changed by 1 months since August of 2011.

Surprisingly, the shadow inventory actually grew from 2010 to 2012, which tells me some knife catchers chasing the 2009 credit might actually be calling it quits by now.

http://www.housingwire.com/news/sp-shadow-inventory-levels-begin-improve

Standard & Poor's analysts estimate it would take 47 months for the housing market to work through the shadow inventory, according to their second quarter research note. They revised that down from 52 months in the first quarter, the first decline since the middle of 2009.

At the end of last year, S&P said the market would need 44 months to move through the inventory and at the end of September 2010, analysts estimated it at 40 months.

iwog   befriend   ignore   Mon, 14 May 2012, 2:21am PDT   Share   Quote   Like (2)   Dislike     Comment 4

Goran_K says

Surprisingly, the shadow inventory actually grew from 2010 to 2012, which tells me some knife catchers chasing the 2009 credit might actually be calling it quits by now.

This is totally absurd. Look at the following graph. Does it look like people who bought in 2009 were "knife catchers"? (I'm using your metro area)

Explain why someone who bought in 2009 is thinking about calling it quits?

My prediction is that this alleged shadow inventory is going to become the great white whale of real estate bears.

tatupu70   befriend   ignore   Mon, 14 May 2012, 2:26am PDT   Share   Quote   Like   Dislike     Comment 5

Goran_K says

No, that's simply not accurate.

Which estimate? That's the point--none of these are accurate.

Goran_K   befriend   ignore   Mon, 14 May 2012, 2:28am PDT   Share   Quote   Like   Dislike (2)     Comment 6

iwog says

This is totally absurd. Look at the following graph. Does it look like people who bought in 2009 were "knife catchers"? (I'm using your metro area)

You're assuming people bought at the absolute bottom (which was January 2009 for Orange County), the $8,000 free credit wasn't in effect yet at that time.

So how could they be chasing that credit if it wasn't in effect?

If someone didn't buy at the absolute bottom, pretty much every other month after January, they are underwater right now as of the February 2012 CS report.

dunnross   befriend   ignore   Mon, 14 May 2012, 2:29am PDT   Share   Quote   Like   Dislike (1)     Comment 7

iwog says

Explain why someone who bought in 2009 is thinking about calling it quits?

Because renting in Los Angeles is still cheaper than buying, and even if market was flat, as you claim (which is complete BS, all in itself), you are still at a big loss. All these buyers who bought in 2009 were betting on appreciation, and, here we are 3 years later, with absolutely nothing to show for it, while food, gas, movie tickets and everything else is going up in price. That does not sound like a good investment to me.

Goran_K   befriend   ignore   Mon, 14 May 2012, 2:30am PDT   Share   Quote   Like   Dislike (2)     Comment 8

tatupu70 says

Goran_K says

No, that's simply not accurate.

Which estimate? That's the point--none of these are accurate.

The S&P. He said that last year's S&P report claimed 10 years of Shadow. Clearly inaccurate.

As for the accuracy and methodology of the S&P, what do you think is inaccurate about it?

Goran_K   befriend   ignore   Mon, 14 May 2012, 2:37am PDT   Share   Quote   Like   Dislike (2)     Comment 9

dunnross says

Because renting in Los Angeles is still cheaper than buying, and even if market was flat, as you claim (which is complete BS, all in itself), you are still at a big loss. All these buyers who bought in 2009 were betting on appreciation, and, here we are 3 years later, with absolutely nothing to show for it, while food, gas, movie tickets and everything else is going up in price. That does not sound like a good investment to me.

That's actually a good point as well.

But I think it's just enough that if people weren't savvy enough to buy in January 2009, as of right now they are slightly underwater in the best of circumstances. If they bought during the latter part of the year, they are 10 to 15% underwater right now (more once you figure in transaction cost to off load the house). Considering the median home price in OC hovered between $400,000 and $450,000 at the time, that represents $40,000 to $60,000!

Quite a price to pay for $8,000 of federal tax credit money.

iwog   befriend   ignore   Mon, 14 May 2012, 2:39am PDT   Share   Quote   Like (2)   Dislike     Comment 10

Goran_K says

You're assuming people bought at the absolute bottom (which was January 2009 for Orange County), the $8,000 free credit wasn't in effect yet at that time.

I'm assuming nothing. Do you know what the knife catching term means? It means prices are falling at a dangerous rate and buying into that market is going to cut you up.

Does it look like prices are crashing in 2009? 2010? 2011???

Absolutely not. Prices are flat. Those tiny changes year to year during that period are normal market fluctuations. The crash ended in early 2009 and EVERY reference to "a continuing real estate crash" or "a market in freefall" or "catching a falling knife" is dishonest.

Realtors Are Clowns says

Prices are falling. What's the hurry?

Prices aren't falling, prices are SHARPLY higher in 2012. You're going to be shocked at the new Case-Shiller reports.

iwog   befriend   ignore   Mon, 14 May 2012, 2:42am PDT   Share   Quote   Like (2)   Dislike     Comment 11

dunnross says

All these buyers who bought in 2009 were betting on appreciation

Absolute unmitigated bullshit. I bought in 2009, 2010, and 2011. I don't need any appreciation because every single one of these properties has positive cash flow. When you speak in absolutes, you're always going to be wrong. (the one absolute that's valid)

Goran_K   befriend   ignore   Mon, 14 May 2012, 2:44am PDT   Share   Quote   Like   Dislike (2)     Comment 12

iwog, c'mon man. You're going to tell someone who bought a house in September of 2009, that the 10% to 15% decline in the price of their home until now is "flat" and "normal market fluctuation"?

I think they would have a few choice words for you.

iwog   befriend   ignore   Mon, 14 May 2012, 2:45am PDT   Share   Quote   Like (2)   Dislike     Comment 13

Realtors Are Clowns says

iwog says

Prices aren't falling, prices are SHARPLY higher in 2012. You're going to be shocked at the new Case-Shiller reports.

In the meantime, prices are falling.

Really? Here's data showing you're dead wrong and I'm right. Do you have data to contradict me?

Strategic Renter   befriend   ignore   Mon, 14 May 2012, 2:49am PDT   Share   Quote   Like (1)   Dislike     Comment 14

Buyers have all the power in this game. Simple watch wait and be priced in forever.

iwog   befriend   ignore   Mon, 14 May 2012, 2:49am PDT   Share   Quote   Like (2)   Dislike     Comment 15

Goran_K says

iwog, c'mon man. You're going to tell someone who bought a house in September of 2009, that the 10% to 15% decline in the price of their home (at the median) until now is "flat" and "normal market fluctuation"?

Yes.

You don't get it do you. Try seeing things from an investor's perspective. (in 2009 investors were nearly the only buyers) I bought a house in late 2009. It cost me $230,000 and in December was probably worth $210,000.

However that house has rented for $1900 a month since I bought it.

Do you think for one microsecond I care that the value has dropped 10%? That $20,000 loss is less than the cash flow I received let alone the principle paydown and tax benefits.

Would I take it back if I could?? Are you fucking kidding me?

iwog   befriend   ignore   Mon, 14 May 2012, 2:51am PDT   Share   Quote   Like (2)   Dislike     Comment 16

Realtors Are Clowns says

WRONG again.

Prices are lower today than this date in;

2011
2010
2009
2008
2007
2006
2005
2004

And next year they'll be lower this time next year.

Housing prices are falling.

That's what I thought. I bring in data, you bring in nothing, yet you're supposed to be right?

I think you're wrong. Prices are sharply higher in 2012 and we'll find out just how much higher when Case-Shiller covers this period in the June and July reports.

Goran_K   befriend   ignore   Mon, 14 May 2012, 2:51am PDT   Share   Quote   Like   Dislike (1)     Comment 17

iwog says

Realtors Are Clowns says

iwog says

Prices aren't falling, prices are SHARPLY higher in 2012. You're going to be shocked at the new Case-Shiller reports.

In the meantime, prices are falling.

Really? Here's data showing you're dead wrong and I'm right.

That's not a valid comparison. You have to look at prices YOY. They've dropped for 2 years straight, and 3 years straight before the 2009-2010 federal tax credit inflated things temporarily.

Weren't you just talking about "market fluctuations" in this thread, now you're using one to base your entire point about prices not falling? Seems kind of funny to me.

iwog   befriend   ignore   Mon, 14 May 2012, 2:53am PDT   Share   Quote   Like (2)   Dislike     Comment 18

Realtors Are Clowns says

Your own data shows it. You posted it knucklehead.

Prices are falling. Why buy when you can rent for half the cost?

On what planet does the closing price (generally several months after an offer is accepted) represent the "price"?

The blue line is the slope of current prices. If you want to know what real estate costs NOW, increase the redline by the same percentage.

Goran_K   befriend   ignore   Mon, 14 May 2012, 2:54am PDT   Share   Quote   Like (1)   Dislike (1)     Comment 19

iwog says

You don't get it do you. Try seeing things from an investor's perspective. (in 2009 investors were nearly the only buyers) I bought a house in late 2009. It cost me $230,000 and in December was probably worth $210,000.

First off, no I don't expect people to think like a rental investor. That's ridiculous. Most people who buy homes as a primary residence don't buy them expecting to turn them into cash flow properties (there's different loans for that).

Most people care about losing 10 to 15% of the value of their home in such a short period of time. I know I would.

Secondly, where in Los Angeles are you buying homes for $210,000? Unless you're talking about 1 bedroom condos in semi-nice areas, or SFHs in Compton or Inglewood, there's no way you can be buying $210,000 in decent areas.

iwog   befriend   ignore   Mon, 14 May 2012, 2:55am PDT   Share   Quote   Like (2)   Dislike     Comment 20

Goran_K says

That's not a valid comparison. You have to look at prices YOY. They've dropped for 2 years straight, and 3 years straight before the 2009-2010 federal tax credit inflated things temporarily.

Are prices falling today or rising today? The assertion was that prices are falling NOW.

Prices are not falling now. If you believe this, you're ignoring every piece of data that has come out over the last three months.

Strategic Renter   befriend   ignore   Mon, 14 May 2012, 2:57am PDT   Share   Quote   Like (3)   Dislike     Comment 21

Anyone who posts with such anger such as iwog is a person under extreme stress and fear. He has made his bed and his future looks rather grim. But he tried so don't knock him for being like the rest of the sheep.

iwog   befriend   ignore   Mon, 14 May 2012, 2:57am PDT   Share   Quote   Like (2)   Dislike     Comment 22

Goran_K says

First off, no I don't expect people to think like a rental investor. That's ridiculous. Most people who buy homes as a primary residence don't buy them expecting to turn them into cash flow properties (there's different loans for that).

You think it's ridiculous? My own tenants could buy the property they are living in for $1300 a month if someone would just give them a loan.

Do you really think they would care about a 10% decline if they were paying $1300 instead of $1900??? Seriously?

Goran_K   befriend   ignore   Mon, 14 May 2012, 2:57am PDT   Share   Quote   Like (1)   Dislike (1)     Comment 23

iwog says

Are prices falling today or rising today? The assertion was that prices are falling NOW.

Prices are not falling now. If you believe this, you're ignoring every piece of data that has come out over the last three months.

Are prices falling this second, or the next second, or the next second?

Is that how you read markets?

iwog   befriend   ignore   Mon, 14 May 2012, 2:58am PDT   Share   Quote   Like (2)   Dislike     Comment 24

Goran_K says

Are prices falling this second, or the next second, or the next second?

Is that how you read markets?

I say three months, so you translate that into seconds.

Interesting.

iwog   befriend   ignore   Mon, 14 May 2012, 3:00am PDT   Share   Quote   Like (2)   Dislike     Comment 25

Strategic Renter says

Anyone who posts with such anger such as iwog is a person under extreme stress and fear. He has made his bed and his future looks rather grim. But he tried so don't knock him for being like the rest of the sheep.

Realtors Are Clowns says

Do you really expect us to believe:

-You're not underwater and sinking?

-You're not a lying realtor?

-Any of your other fantasies?

Housing prices are falling. There is no urgency.

Goran_K   befriend   ignore   Mon, 14 May 2012, 3:01am PDT   Share   Quote   Like (1)   Dislike (2)     Comment 26

iwog says

You think it's ridiculous? My own tenants could buy the property they are living in for $1300 a month if someone would just give them a loan.

Do you really think they would care about a 10% decline if they were paying $1300 instead of $1900??? Seriously?

Again, I don't know what market you live in where you can buy $210,000 homes that rent for $2k. It's certainly not Los Angeles.

iwog   befriend   ignore   Mon, 14 May 2012, 3:04am PDT   Share   Quote   Like (2)   Dislike     Comment 27

Goran_K says

Again, I don't know what market you live in where you can buy $210,000 homes that rent for $2k. It's certainly not Los Angeles.

Northern California within a 40 minute drive to San Francisco.

That's not relevant. Your thread was about national data. Even if you're right about Los Angeles, it doesn't apply to most of the country.

Goran_K   befriend   ignore   Mon, 14 May 2012, 3:06am PDT   Share   Quote   Like   Dislike (1)     Comment 28

I think I'm going to stop responding to Iwog. The guy is either trolling or really delusional.

He says 10 to 15% depreciation in home prices is over a 3 year period is "flat" and "normal fluctuation" that isn't important to look at as an "investor", whatever that means.

Then he brings up month-to-month price fluctuations from March to May as his supporting evidence that prices are actually rising.

Am I missing something here? We're being trolled pretty badly right?

iwog   befriend   ignore   Mon, 14 May 2012, 3:10am PDT   Share   Quote   Like (2)   Dislike     Comment 29

Goran_K says

He says 10 to 15% depreciation in home prices is over a 3 year period is "flat" and "normal fluctuation" that isn't important to look at as an "investor", whatever that means.

It's only 10-15% depreciation if you pick the peak of 2009 and the bottom of 2011 and ignore some very big appreciation in the first quarter of 2012.

But hey.....if you only want to talk to people who agree with you, go ahead.

iwog   befriend   ignore   Mon, 14 May 2012, 3:12am PDT   Share   Quote   Like (2)   Dislike     Comment 30

Sold prices in San Francisco have now exceeded their 2011 highs according to Redfin. Doesn't match your narrative?

This graph also clearly shows the lag time between asking prices and sold prices. This is what happens to LA next month.

Goran_K   befriend   ignore   Mon, 14 May 2012, 3:12am PDT   Share   Quote   Like   Dislike (1)     Comment 31

The peak (or near the peak) is when the tax credit was in full effect. That's when most transactions were taking place and for inflated prices because people wanted $8,000 of "free money".

Why wouldn't I use that as my starting point?

Hysteresis   befriend   ignore   Mon, 14 May 2012, 3:17am PDT   Share   Quote   Like (2)   Dislike     Comment 32

Goran_K says

I think I'm going to stop responding to Iwog. The guy is either trolling or really delusional.

he's both.

i decided the same - he's on my ignore list since he doesn't say anything of value.
there's no point arguing with retards.

Ironman   befriend   ignore   Mon, 14 May 2012, 3:18am PDT   Share   Quote   Like (1)   Dislike (6)     Comment 33

iwog says

I think you're wrong. Prices are sharply higher in 2012 and we'll find out just how much higher when Case-Shiller covers this period in the June and July reports.

Dude, you need to take off the rose colored glasses!! The graph you posted shows the normal uptick in the spring!! Just like it did in 2011 and 2010, etc. EXCEPT, the uptick is SMALLER then the previous years and the home prices will CONTINUE to drop LOWER after the small burst!!

Each Spring uptick in the last few years has been smaller then the previous, and then the sales prices keep dropping!!

Take your eyes off the "Listing" line part of your graph and focus on the "Sold" line part of your graph. Listing prices don't mean jack..... you just like the way that "Listing" line is moving...

iwog   befriend   ignore   Mon, 14 May 2012, 3:18am PDT   Share   Quote   Like (2)   Dislike     Comment 34

Goran_K says

The peak (or near the peak) is when the tax credit was in full effect. That's when most transactions were taking place and for inflated prices because people wanted $8,000 of "free money".

Why wouldn't I use that as my starting point?

Why would you use that as a starting point? Most people who bought in 2009 didn't take the tax credit because most people who bought in 2009 were investors.

I'm actually stunned anyone would make the argument that a 10% loss over three years matters to anyone when during the prior bull market, prices were going up 10-30% PER YEAR. Prices might make up that 10% in 2012. All of it. What are you going to say then?

Goran_K   befriend   ignore   Mon, 14 May 2012, 3:19am PDT   Share   Quote   Like   Dislike (2)     Comment 35

iwog says

Sold prices in San Francisco have now exceeded their 2011 highs according to Redfin.

How many of those are $210,000 cash flow positive homes that make up your investment portfolio?

iwog   befriend   ignore   Mon, 14 May 2012, 3:21am PDT   Share   Quote   Like (2)   Dislike     Comment 36

Call it Crazy says

Take your eyes off the "Listing" line part of your graph and focus on the "Sold" line part of your graph. Listing prices don't mean jack..... you just like the way that "Listing" line is moving...

If that's the case, why does the sold price always go up after the listing prices go up? Look at the San Francisco graph and tell me listing prices don't mean jack.

Goran_K   befriend   ignore   Mon, 14 May 2012, 3:21am PDT   Share   Quote   Like   Dislike (1)     Comment 37

iwog says

Most people who bought in 2009 didn't take the tax credit because most people who bought in 2009 were investors.

Complete BS.

Bigsby   befriend   ignore   Mon, 14 May 2012, 3:22am PDT   Share   Quote   Like   Dislike     Comment 38

Strategic Renter says

Anyone who posts with such anger such as iwog is a person under extreme stress and fear. He has made his bed and his future looks rather grim. But he tried so don't knock him for being like the rest of the sheep.

His posts don't strike me as angry at all.

iwog   befriend   ignore   Mon, 14 May 2012, 3:22am PDT   Share   Quote   Like (2)   Dislike     Comment 39

Goran_K says

How many of those are $210,000 cash flow positive homes that make up your investment portfolio?

None. I don't buy real estate in San Francisco. Here's my graph:

Goran_K   befriend   ignore   Mon, 14 May 2012, 3:22am PDT   Share   Quote   Like   Dislike (2)     Comment 40

Hysteresis says

he's both.

i decided the same - he's on my ignore list since he doesn't say anything of value.
there's no point arguing with retards.

I generally don't like to ignore people outright, but iwog is getting close. I'm still not sure if he's being serious or just trying to troll, that's the weird thing.

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