RealtyTrac, CoreLogic Confirm Housing Bear Thesis: 85-90% of REO Being Held Off Market, Meaning “Tight” Inventories Are Bogus
RealtyTrac, CoreLogic Confirm Housing Bear Thesis: 85-90% of REOHeld Off Market
By HousingBoom Follow Sun, 27 Jan 2013, 8:03pm 4,301 views 114 comments
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Again, the sheep will get slaughtered when the housing market collapses.
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HousingBoom says
I guess even the powers to be, who ever they may be, understand home price appreciation only keep up with inflation and incomes over the long run ... (R. Shiller facts). Else they wouldnt have allowed further declines in prices.
LOL! how do you explain to millions of all those homeowners (outside of CA) that the higher property tax due to higher market values during the boom years was all BOGUS...
I bet many want their property tax payment back...
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HousingBoom says
LOL, this was 6 months ago.
Today, there isn't even a shadow of the shadow inventory.
No one wants to sell their home in this ridiculously low price environment. Americans are too smart for that.
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underwaterman says
So far al I see is the perma bears. Anyone who listened to them a year ago are sorry as hell.
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Raw says
LOL
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Raw says
mid 90s prices plus inflation.. if it hasnt happen yet it will.
Miami, Az, LV and many have seen back to normal..all your seeing
in these metros is volatility and appreciation around rate of inflation. no biggie...
some others like SFBA have not yet correct back to long term trend.
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Monterey, CA
underwaterman says
No, they didn't. People were simply questioning your outlandish numbers.
And this forum doesn't have a single permabull. Everyone on here was bearish up until a certain time (or continue to be so). It just happens that some people have seen that things aren't as bad as you like to make them out to be and have either returned to investing in RE or have bought homes for themselves in recent years.
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chanakya4773 says
Yes there is a demand out there and lots of supply even in San Francisco Bay Area.. South Bay.. there is 20-25% non-performance of former tech facilities.. the other side of Silicon Valley ignored by the media lay vacant/empty .. a waste land now for over decade.. these places were busy as hell back in the day.
you can add former airfields Moffet and lots of old 50s factories like Sunnyvale Westinghouse to the list.. plenty of old land to put new housing up....
frankly the owners of these facilities/land are getting shit ZERO IN RENTAL INCOME..i seen some turned into Churches of all things..Former HP buiding of Aques, Sunnyvale.
as such the debt burden by city/county/state will force them to expand them by rezoning all this land into residential homes to increase tax revenues. and put more inventory into the markets.
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According to Zillow there are 20 houses for sale in my town. Exactly zero of them are REO.
There are 17 houses that have been foreclosed, are vacant and not for sale and another 65 that are in foreclosure proceedings.
While I think shadow inventory issue is a bit overblown, it does appear that the banks are holding inventory to a certain extent. In the spring/summer of 2012 when we were looking for a house more than half of what we saw was REO.
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Los Angeles, CA
varmint says
It's stunning how many foreclosures are in central LA right now. 90% of what's on the market. I'm sure they'll all get bought up by cash flippers and put back on the market for 20% more than comps.
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Philistine says
Central LA has that many forecosures on the market? I'm surprised.
I can't imagine why anyone in their right minds would want to even live in such a dump. Half the people there are criminals and the other half are victims of the criminals.
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Philistine says
Depends.
I would imagine stuff getting foreclosed this late in the game has LTV >> 100% so it won't sell at auction. Minimum bid is typically the amount owed on the house.
Once they go REO they'll be priced at market so there's probably not a lot there for flippers depending on how much prices have already risen in your area.
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Scottsdale, AZ
robertoaribas's website
varmint says
obviously, you don't know anything about foreclosures then. The bank doesn't usually set the minimum bid at the debt owed, or NOTHING would ever get bought at auction; they have have done that in 2006, but they learned. They estimate the value it will sell for. Right now, about 50% are purchased, 50% go back to the bank. the largest disposition, is in short sales long before the auction.
Another thread quoting the dreaded only the shadow knows... inventory... well, today, we had a huge 80 Notice of trustee sales in Phoenix, with 80 cancelled notice of trustee sales, and 80 actual trust sales...
80 less foreclosures coming towards phoenix at 5pm then there were at 8am... does that seem like an impending foreclosure wave?
80 sales a day comes out to 1600 a month, which is more than pr-2005 rates, but in a market with 7000 sales a month is not enough to slam it down. We are down over 10,000 in inventory from any number that would lead to price decreases. It would take a hell of a lot more forelcosure action than anything going on to topple this market. go to foreclosureradar.com and research your own area;
There is a huge difference between the shadow inventory of Florida, NY, NJ and other judicial states to those of trust deed states, a fact conveniently glossed over in this article.
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Simi Valley, CA
here's the location massive shadow inventory. have a look:
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Pleasanton, CA
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Raw says
Sorry why? Because now they have all their wealth in the virtual home equity, that is about as reliable as getting a nice sleep next to the giant printing press of this country. Money anyone? Here is a truck for everyone. Now lets go spend it on housing cause that will make you rich. Go boys and girls, help this country out of the pit.
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Of course, some of it can be accounted for by the changes in accounting rules that allow the banks to keep failed notes from being accounted as REO and therefore preserving the fiction that bank is not bankrupt and subject to dechartering.
But I wonder how much of the trouble can be ascribed to the logistical gaga of repatriating a failed from inside of an MBS instrument.
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Tarzana, CA
Raw says
I'm not 'sorry as hell'. What? Let's see, I could have had:
(All are plural)
1.) Condos that look onto other people's property
2.) Condos that look onto stucco walls
3.) Condos that need $money$ plus mortgage to be liveable.
4.) Condos that that are investor flips
5.) Condos with high HOA fees
Basically, I could have bought the bank's sh*t, or given my equity to an investor.
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Huntington Beach, CA
Yes. Those have been the options here too. Buy property in bad location or tiny and overpriced. Or the investor flips which can sell for 10% more than normal.
All options suck for home buyers right now. The market is so bogus if you buy something now you should pay for it with $3 bills.
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Huntington Beach, CA
Thanks Obama, it's because of you and your bankster puppeteers that I've lost all hope of owning my own home.
I guess I'm not poor enough or lazy enough to deserve a seat at the table.
F---!
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Quigley says
hehehehe
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Mountain View, CA
FUCK YOU BERNANKE!!!1
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robertoaribas says
Ever think that it's more advantageous for the bank to not sell at auction? Smaller pool of buyers (in CA you need 100% cash on the steps) who will be risk adverse due to no inspections etc.
Yes some are discounted from amount owed but from what I've followed, most are not. I'm sure this depends on the specific market and how much REO the bank is willing/able to take on.
What's true for you in AZ is not necessarily what's true for someone else in CA. As for your tone: get fucked.
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Scottsdale, AZ
robertoaribas's website
http://www.foreclosureradar.com/california-foreclosures
3400 back to banks at foreclosure, dec 2012
2300 sold.
so clearly, a lot of them are discounted from loan value...
sorry if actual knowledge of the process offends you so much.
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thank you, this data is more helpful than insults
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Quigley says
Obama and Bernanke had a job to do....Get the housing market and the economy back on the path to recovery. They have achieved this with flying colors, and undoubtedly deserve praise, not criticism.
Many home buyers who did not see the bounce in housing coming have missed the boat, but that should not stop anyone from jumping onto the next boat which will come along.
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David9 says
No mention of $100,000 gain in equity you could have had? I find it hard to believe you would not want it.
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Scottsdale, AZ
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varmint says
No trouble at all. My new years resolution is to keep the data to insult ratio above 2 to 1. please let me know if I fall short of this goal.
Also, to be honest, that is a shockingly high rate of cancellations, and if I were considering buying in California, I'd investigate that further. The Phoenix rate is about 60% cancelled, 25% back to bank 15% sold to 3rd party. Why would so much more be cancelling in California? Are they selling that many short sales? or simply failing to proceed to foreclosure? The answer to that question is fairly important for the future of the market there.
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Tarzana, CA
Raw says
Of course I want that. Why do you think I bitch and complain so much ?
In the low end open market, that much of an equity gain is not a reality.
Now, if I was a cash investor at the courthouse steps..
You betcha ;-)
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Lafayette, CA
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HousingBoom says
Wow........do any of these people actually shop for real property?
Confirms a bear market in housing? Seriously??
Go make an offer 5% lower than the market price one year ago today and see how hard the agent/owner laughs at you. Holy crap batman! I've seen denial before but this is getting ludicrous.
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Scottsdale, AZ
robertoaribas's website
iwog says
This is the best damn bear I've ever met! I'm going to put a saddle on tis bear and ride it around while i drink some scotch!
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Fremont, CA
Raw,
The job Ben Bernanke and Obama (and Bush) had to do was rob honest citizens of their hard earned savings and their future. They are no better than Bernie Madoff. The only advantage they have over Bernie is they have the law on their side.
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iwog says
Did you actually read the article? Did you even read the headline? Massive REO is being held off the market, simple supply and demand means yes the price will be going up. IT IS ARTIFICIAL DUE TO THE SUPPLY BEING HELD OFF THE MARKET. I know both you and Roberto understand this.........
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Lafayette, CA
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yup1 says
Massive REO supply, even if it does exist, can be kept off the market for a fucking decade if the banks want to keep it off that long.
Bank CEO: "OMG!!!! Home prices are sharply higher in 2012!!! Lets hurry up and sell everything and drive prices back down again!!!!"
The premise of the article is bullshit if it's false and is also bullshit if it's true. THAT is the main point.
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iwog says
Not if they are ever subjected to real accounting.
iwog says
HAHA!
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Scottsdale, AZ
robertoaribas's website
yup1 says
It is total bullshit... 5 years ago, I knew literally dozens of people squatting in their homes; Today I don't know a one, and every single home has been sold off. Not a single shadow home.
Now, I realize 20 or so is a small sample size, but what are the odds 100% of them would be foreclosed on and sold, while thousands of others weren't?
DESPITE what nitwits misstate about accounting, publicly traded banks are actually required to report the number of loans 30/60/90 days late or in foreclosure. The numbers get put out there. Ditto all of the credit reporting agencies which within a couple weeks or so, get mortgage delinquency notices on every type of bill not paid on time, including mortgages. These statistics have all improved remarkably for Arizona and California over the past year. Judicial states still have large numbers of shadow homes, due to court delays. Trust deed states don't.
And, as a final point, home prices in Arizona are ALREADY up 30% from the bottom. On the bottom tier, it is more like 60%, and in the worst hit property types, 80% or more. With low supply, and reasonable demand, they are going to increase all this year, even if you were right.
So, even if the far fetched premise of the brilliant bank manipulation were true, given the timelines to file the foreclosures, take back the properties, market them, and sell them, it is already too late to affect this spring or summer market. (not to mention that notice of foreclosure filings are running at 7 year record lows). By that time, prices will very likely be up a minimum of 10% more, and it would take another year for inventory to grow, and a further year to see a serious correction. Maybe you guys have forgotten how long it took from when home sales dropped off a cliff, until prices fell, but it took years.
So, your premise, which is far fetched, would take several years just to get home prices back down to where they are today, let alone last year... Several years, I might add, that I will be charging twice in rent than the current mortgage of anything I consider buying...
We are adding 200,000 jobs a month. Are you really going to bet the economy doesn't get significantly better in 2 or 3 years? I'm doing all of my rent/buy analysis on rental rates that are the lowest they've been in 15 years here, but the market is slowly improving. Are you really willing to bet we don't get say a 5% rent improvement over the next three years?
Investing is odds, it is never guaranteed. I like the odds I have now, better than any I've ever had.
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Fremont, CA
Robert,
You going to bet the farm on a sample of 20? Oh by the way, does the series "property wars" make you feel better or worse about your investments? No sarcasm just a question.
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Scottsdale, AZ
robertoaribas's website
inflection point says
yeah, cause that's what I said.. I never mentioned the actual delinquency data, widely reported in the media, I've never posted foreclsoureradar.com which also estimates the bank owned REO, nor the fact that inventory is down 70% from 2 years ago, and remains very tight at 3 months supply, or all the posts I have on patrick.net about the dramatic decline in foreclosures and notice of future foreclosure filings...
in fact ALL THE DATA says their isn't any real shadow inventory, and all the shadow believers ever have is, "I drive around and see empty homes..." hell my house might look empty when nobody is home. People go on vacation too. rentals sit empty in between tenants.... there are vacation homes too.
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robertoaribas says
Go read Calculated risk or LPS if you want to see the actual numbers not your anecdotal evidence. LPS report shows 5.6 Million homes in foreclosure or delinquent. That is a fact. The banks DO NOT have to issue a notice of default at 90 days, they can. Do you want anecdotal evidence. Here are some homes in my neck of the woods.
http://www.zillow.com/homedetails/1111-La-Sierra-Dr-El-Dorado-Hills-CA-95762/18594431_zpid/
Notice of Default January 10, 2013. $135,209 past due. That is much greater than 90 days late.
http://www.zillow.com/homedetails/8029-Marches-Way-El-Dorado-Hills-CA-95762/59929320_zpid/
Notice of default March 2011. $41,579 past due. Foreclosure auction 1 year and 10 months later.
Now you will say I cherry picked a couple places but I could literally link homes all day that are in this same condition. There are 2040 homes in Mesa, AZ that are up for foreclosure auctions.......
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robertoaribas says
On my street banks have been trying to sell 2 foreclosed properties for months. They just pulled one from the market, it did not sell. I went and looked in it when they had the open house. It was priced at a 10% premium to another house just up the street. It has at least 35K in work that needs to be done.
Go sign up for zillow if you want to see some of the foreclosure inventory in your area. I repeat SOME because I know that it is not all the inventory. That is a fact.
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In fact for Zillow they only show homes in Mesa, AZ that are in fact scheduled to be auctioned, they do not show homes that have a Notice of Default. It is so bad that they are even scrubbing the data to remove the date that NOD was issued.