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


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2012 May 14, 2:05am   44,477 views  78 comments

by Goran_K   ➕follow (4)   💰tip   ignore  

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.

#housing

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1   GUAB   2012 May 14, 2:06am  

That sucks :(

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

2   Goran_K   2012 May 14, 2:08am  

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

3   Goran_K   2012 May 14, 2:14am  

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.

4   tatupu70   2012 May 14, 2:26am  

Goran_K says

No, that's simply not accurate.

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

5   Goran_K   2012 May 14, 2:30am  

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?

6   Goran_K   2012 May 14, 2:37am  

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.

7   Strategic Renter   2012 May 14, 2:49am  

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

8   Goran_K   2012 May 14, 3:12am  

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?

10   toothfairy   2012 May 14, 3:27am  

1 word

BulkREOSales

11   Bigsby   2012 May 14, 3:28am  

Realtors Are Clowns says

But it's fun to poke greedy, lying real-tards with a stick.

How many different names have you posted under so far?

12   Bigsby   2012 May 14, 3:30am  

Realtors Are Clowns says

How many different lies and you stated to the public about housing?

English please.

13   bubblesitter   2012 May 14, 3:33am  

Amen to bottom feeders(investors) who can't close the deal with 200K to 300K cashiers check. I don't see a housing cheer leader complaining about not closing a deal with a 1000K or 2000K cashiers check. :)

14   Bigsby   2012 May 14, 3:37am  

Realtors Are Clowns says

Prices are falling. It's not opinion. It's truth. Besides.... who gives rats ass what you take seriously. You're nothing more than liar.

Same old, same old. Apparently anyone who disagrees with you is a liar and yet it's you who never offers any evidence and keeps changing the name they post under. You are a WUM. Nothing more.

15   toothfairy   2012 May 14, 3:39am  

all the remaining bears seem to have been herded into this forum if we can now just lock the gate and send them floating off to sea.

16   Bigsby   2012 May 14, 3:40am  

Realtors Are Clowns says

Bigsby says

Same old, same old. Apparently anyone who disagrees with you is a liar and yet it's you who never offers any evidence and keeps changing the name they post under. You are a WUM. Nothing more.

Same old, same old. Apparently anyone who calls you out on your lies is a WUM. Nothing more.

Prices are falling.

I rest my case.

17   Bigsby   2012 May 14, 3:45am  

Realtors Are Clowns says

Bigsby says

I misrepresent the truth about housing to the public

We know.

So you write other people's posts for them know, do you? That's very sad, but oh-so predictable for you.

18   Goran_K   2012 May 14, 3:51am  

Where's all this data coming from? 50,000,000 homes sold in 2009? Mostly bought by investors?

I feel like I'm taking crazy pills.

19   Bigsby   2012 May 14, 3:52am  

Realtors Are Clowns says

Bigsby says

Realtors Are Clowns says

Bigsby says

I misrepresent the truth about housing to the public

We know.

So you write other people's posts for them know, do you? That's very sad, but oh-so predictable for you.

So you misrepresent the truth about housing, do you? That's very typical and predictable for used house pimps.

You know if you want people to take anything you say seriously (which I presume you don't), then an original thought would help rather than parroting responses. As you're no doubt in your parents' basement right now, just shout up the stairs to them for some help.

20   freak80   2012 May 14, 3:53am  

Daaaaaa Bullsss.

Daaaaaa Bearsss.

21   jaz5   2012 May 14, 3:53am  

The prices in Los Angeles and Orange counties can still be summed up in one word - RIDICULOUS!

I have seen homes in VERY middle class neighborhoods, we're talking about Downey and Cerritos here, not exactly upscale or ritzy, just plain and average - asking prices for SFRs are half a million or more for a 40-50 yr old home less than 2000sqft, sheer INSANITY!

22   Bigsby   2012 May 14, 3:56am  

Realtors Are Clowns says

Bigsby says

You know, if you want people to take anything you say seriously (which I presume you don't), then an original thought would help rather than parroting responses. As you're no doubt in your parent's basement right now, just shout up the stairs to them for some help.

You know, if you realtards want people to take anything you say seriously, stop lying to the public about housing.

I do believe we've already had this discussion before. Obviously you are incapable of retaining information.

23   Bigsby   2012 May 14, 4:03am  

Realtors Are Clowns says

I do believe we already had this discussion before. Obviously you reat-liars are incapable of being truthful with the public.

Why is that?

What's a reat-liar?

24   Goran_K   2012 May 14, 4:06am  

Where are you getting 5,000,000?

According to the NAR, one of your own sources, there were 2,000,000 new homes sold from the beginning of the credit to the end of September.

Did 3,000,000 new homes get sold after September until December?

http://articles.businessinsider.com/2009-09-23/wall_street/30061415_1_credit-for-first-time-tax-credit-homebuyers

The $8,000 tax credit for first time homebuyers, enacted this year when Congress passed the $800 billion stimulus program, was meant to spur higher prices and new buying. But according to an estimate by the National Association of Realtors, of the 2 million new homebuyers since the credit was instituted, just 350,000 say they would not have bought a house without the tax break.

Read more: http://articles.businessinsider.com/2009-09-23/wall_street/30061415_1_credit-for-first-time-tax-credit-homebuyers#ixzz1urul8wF8

25   RentingForHalfTheCost   2012 May 14, 4:11am  

toothfairy says

all the remaining bears seem to have been herded into this forum if we can now just lock the gate and send them floating off to sea.

remaining? Seems to be more and more of us each year. I love that there are still bulls because that means more and more people buying today to be part of the underwater group tomorrow. In the end it will just mean a deeper and more intense overshoot of the mean housing price. I wouldn't want to lock up the bulls, keep them coming. Fly them in from foreign lands, give them more leverage, bring back the no payment liar loans, lets get prices rising again with whatever means is possible. Cash is king baby, and the longer this game of bluffing goes on the better my full house looks. Oh yah! Down we go, if not today then tomorrow. ;)

26   dunnross   2012 May 14, 4:23am  

RentingForHalfTheCost says

I love that there are still bulls because that means more and more people buying today to be part of the underwater group tomorrow. In the end it will just mean a deeper and more intense overshoot of the mean housing price.

My thoughts, exactly. Remember, the objective of the bubble is to suck in as many suckers as possible. Also, bubble bottoms don't look at all like what we have today, with multiple offers competing for stinking sh*t hole shacks, investors drooling all over themselves at the court-house steps, and calls for a bottom all over the media. Bottoms are very quiet events, with almost everyone convinced that prices will keep falling, and hardly any buyers. The fools who bought in 2009, 2010, 2011 & 2012 will all be foreclosing by then, and real estate will be a dirty word, once again. Does this look like a bottom to you today, where I hear new people are getting their real-estate licenses, and people talking about real-estate at dinner parties, as if the last 5 years of a crash was just one of those mere "corrections". No, not enough people have been burned enough by this crash, and the folklore of "easy money" made in RE, is still fresh on people's minds.

27   dunnross   2012 May 14, 4:26am  

Bigsby says

Bulls? Who are these supposed bulls?

All the bulls don't know about patrick.net yet? They are on the streets and at dinner parties. When we see a true housing bottom, patrick will be on CNN & Fox News, and dunnross will be a household word!

28   Bigsby   2012 May 14, 4:32am  

dunnross says

All the bulls don't know about patrick.net yet? They are on the streets and at dinner parties. When we see a true housing bottom, patrick will be on CNN & Fox News, and dunnross will be a household word!

He's talking about on here.

29   CL   2012 May 14, 5:01am  

dunnross says

Also, bubble bottoms don't look at all like what we have today, with multiple offers competing for stinking sh*t hole shacks, investors drooling all over themselves at the court-house steps, and calls for a bottom all over the media. Bottoms are very quiet events, with almost everyone convinced that prices will keep falling, and hardly any buyers. The fools who bought in 2009, 2010, 2011 & 2012 will all be foreclosing by then, and real estate will be a dirty word, once again. Does this look like a bottom to you today, where I hear new people are getting their real-estate licenses, and people talking about real-estate at dinner parties, as if the last 5 years of a crash was just one of those mere "corrections". No, not enough people have been burned enough by this crash, and the folklore of "easy money" made in RE, is still fresh on people's minds.

I totally agree. How can it be anything other than this? More pain needs to come.

30   Bigsby   2012 May 14, 5:12am  

Realtors Are Clowns says

Bigsby says

Realtors Are Clowns says

I do believe we already had this discussion before. Obviously you reat-liars are incapable of being truthful with the public.

Why is that?

What's a reat-liar?

YOu're a realt-liar? We already know that.

Is that the royal we? As you know so much about me, where do I live and work?

31   RentingForHalfTheCost   2012 May 14, 5:16am  

Bigsby says

dunnross says

All the bulls don't know about patrick.net yet? They are on the streets and at dinner parties. When we see a true housing bottom, patrick will be on CNN & Fox News, and dunnross will be a household word!

He's talking about on here.

There are a few on here, but I meant more in general. Like dunross said, all the fools rushing into the housing today thinking the storm is over. All I see on Patrick is Bears and Pigs. We all know what happens to Pigs. ;)

32   Goran_K   2012 May 14, 5:24am  

Show me all the $210,000 SFH in any of the following areas: Pleasant Hill, Walnut Creek, Danville, San Ramon, Dublin, all of the South Bay from Fremont to Campbell to Mountain View, or the Peninsula.

33   Bigsby   2012 May 14, 5:32am  

RentingForHalfTheCost says

There are a few on here, but I meant more in general. Like dunross said, all the fools rushing into the housing today thinking the storm is over. All I see on Patrick is Bears and Pigs. We all know what happens to Pigs. ;)

Are you referring to certain areas in CA or the US in general because there is very little foolishness involved in buying homes in very many areas of the US right now. And quite frankly, there's not much indication prices are going to drop substantially from here even in the BA. If you intend to live in your home long-term, then this looks like an OK time to buy. Nobody has a crystal ball, but if you like the house, can afford the monthly nut, and aren't planning to move in the foreseeable, then I don't see the problem. The perma-bears on here will of course disagree.

34   freak80   2012 May 14, 5:43am  

If Patrick is considering a REIT, I think the bottom is in. At least for some neighborhoods.

35   tiny tina   2012 May 14, 5:49am  

Even if the size of the shadow inventory in this article were correct, you have no idea what the result will be.

-banks could sell the homes in bulk to investors to rent out
-banks could sell the homes to investors to spiffy up and sell
-banks could continue to hold back the inventory
-banks unload all of the homes in a flood and collapse themselves and the entire economy likely causing most of us to lose our jobs

I'm sure there are other options out there, but I think these are the most likely. None are all that helpful to bears.

This shadow inventory talk reminds me of the Option ARM stuff people kept saying about 1-2 years ago as the main reason why the BA was in trouble. I guess when that argument was gone, someone had to come up with a new reason for a collapse.

We'll see. Maybe the shadow inventory will cause big price drops. I don't see it happening in desirable areas.

36   RentingForHalfTheCost   2012 May 14, 6:09am  

wthrfrk80 says

If Patrick is considering a REIT, I think the bottom is in. At least for some neighborhoods.

We keep forgetting about the 4 levels for parking. Still more to fall nationally I fear. This fake bottom is just a place for more people to jump on the elevator down. It is not about affordability to previous years. It is about who the hell can buy. Prices are emotional up and also emotional down. I'll wait until I see people crying in their yards to put my cash into the game.

37   RentingForHalfTheCost   2012 May 14, 6:11am  

tiny tina says

-banks could sell the homes to investors to spiffy up and sell
-banks could continue to hold back the inventory
-banks unload all of the homes in a flood and collapse themselves and the entire economy likely causing most of us to lose our jobs

You just described my investing strategy. Long Lowes and Home Depot, short banks. :)

38   Goran_K   2012 May 14, 6:31am  

Yeah Lowes closed 20 stores last year, and laid off about 2,000 workers.

But hey, housing is doing great.

39   Goran_K   2012 May 14, 7:17am  

So you're saying you couldn't find one?

I think the point has been proven.

40   rooemoore   2012 May 14, 7:28am  

There are retarded threads on Patrick.net, but this one is legendary.

Realtors are clowns debate style:

"Prices are falling!"

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