patrick.net

Just admit it...

You are sitting on a lot of real estate investments that you can't stand to crash big time...

We know the truth hurts but to deny it is doing yourself a very big disservice.

It doesn't take a Berkeley professor with a Math degree to realize that the banks are withholding inventory. People are allowed to squat in their houses for 3+ years. There are stories of people who have not paid their mortgage in over 5 years, and they still have their houses. Isn't that proof enough?

The fact that a Berkeley Math Professor can't understand the simple concept of why RE hasn't reached it's true bottom due to very obvious shadow inventory makes me seriously lose faith in this country.

It also proves to me what I've believed for a very long time; That college curriculum is for the most part very insufficient & useless in the real world. It's just a stupid piece of paper that ego-maniacs like to boast & brag about.

Better to actually do great things than to merely speak about being able yet
fail at walking the talk.

"And NO, if the market here crashes further, i will happily buy even more properties at that time!"

Good luck happily buying anything after another crash... Because banks all over will have a solvency problem.

Robber Baron Elite Scum says

Just admit it...

You are sitting on a lot of real estate investments that you can't stand to crash big time...

I agree.
He is losing sleep right now.

After the election, I expect a big recession.

xenogear3 says

He is losing sleep right now.

I've lost plenty of sleep over my investments, in my time, but, never did I insult anyone, because of it.

Just google Dean Graziosi.
He has more info than him.

The answer forming in this thread, is that its common knowledge because the perma-bears keep saying it, therefore it must be true.

In our area I have been seeing foreclosures come to market in a matter of weeks after the notice is posted on the door. There may well be reasons (legal issues) that are making the squat times so high in other states.

While the arguments for banks sitting on inventory have merit (massive writedowns, etc), so too does the case as to why banks would not sit on massive inventory.

The one flaw I see in the writedown theory is that while the number of foreclosures is likely to decrease the farther we get away from 2008, there will still be some, so a bank would need to spread their losses out over many many years (current years plus some portion of the prior years). In fact, they'd have to balance the losses out with profits, the latter being MUCH thinner these days. Couple this with having to pay expenses (taxes, HOA's, minimal upkeep), and loss of value due to deteriorating condition. Sitting on too much inventory would destroy your profits just in expenses, not to mention the compounded loss when you did eventually sell it. So the strategy would only work up to a certain inventory load.

There may very well be tax advantages I am not aware of that mitigate some of this, but if you were in that big of a hole, most companies would at least consider putting it all on one years books, do a limited bankruptcy to write off the losses, reorganize, and come back profitable.

Banks look at the same projections we do, the market will be flat at best for the next decade, with perhaps modest growth in line with inflation. Unless they are betting the farm that the projections are wrong (unlikely), or hoping for a Romney presidency and get some massive forgiveness tax break (possible, and I hope unlikely), then there doesn't seem like a huge advantage to sit on property unless you had a TON in a local market that would crater the values. Based on the short supply in many localities, banks would be getting more on the market right now before the seasonal dip in the winter months. This of course assumes they had the inventory and could legally sell it that fast.
They aren't, so what's that tell you?

robertoaribas, you really need to learn more from Dean Graziosi.
He is selling AZ real estate, too, and everyone believes him.

Your selling pitch is not very good.
Everyone here hates you.

robertoaribas says

increasing filings for foreclosures, increasing delinquencies on mortgages. Neither of these are happening at this

Foreclosures starts are rising YOY:
http://finance.yahoo.com/news/foreclosure-starts-rise-040152590.html

Also how do you explain DataQuick, and Corelogic (both firms I believe who have more resources to rely upon for accurate data than "Roberto Aribas) reporting that shadow inventory is still exceptionally high?

robertoaribas says

Now, if a tsunami of shadow inventory is coming, it would seem that several measurable precursors would predict it: increasing filings for foreclosures, increasing delinquencies on mortgages. Neither of these are happening at this time.

Sure, like they predicted back in 2008 that prices were going to drop. Except Peter Schiff, Mish & Roubini hardly anyone predicted it. But now, these same economists are predicting another crash, and people like roberto are, once again, not listening.

robertoaribas says

How can you not know the difference between NATIONAL data and LOCAL data? Anyways, in AZ, foreclosure starts for the first half of 2012 are down 37% from 2011... per dataquick... So, if we saw prices increase over last year, and have less foreclosures gong forward... what conclusion would you draw?

If you only want to talk about Arizona, maybe you should change your thread title to "Common Knowledge that the banks are withholding foreclosure homes in ARIZONA..."

Besides, I believe many people have covered Arizona specifically. Arizona crashed very hard compared to most areas of the nation. So the correction in Arizona is happening quicker than other areas. That sort of still belies the fact Arizona has one of the highest percentages of underwater homeowners in the country:
http://s.wsj.net/public/resources/documents/info-NEGATIVE_EQUITY_0911.html

So we'll see how many will continue to pay their mortgages when their neighbors walked away long ago, and people are picking up their home for a fraction of the previous note.

Like I said Robert, foreclosures starts are down in Arizona, but I don't believe that tells the whole story. Arizona is #2 in the nation for percentage of homeowners with negative equity (only behind Nevada):
http://bottomline.nbcnews.com/_news/2012/03/14/10626408-5-states-drowning-in-underwater-mortgages?lite

Here are some other facts about the Arizona market:
- Percent homes underwater: 48.3 percent
- Total property value: $243.02 billion
- Mortgage debt outstanding: $226.22 billion
- Median home value drop from peak: 47.9 percent (second-biggest decline)
- Homes in foreclosure or 90-plus days delinquent: 7.1 percent (11th-largest percentage)

Being #2 in negative equity, and #11 in the 90+ day deliquency department show me that Arizona might be enjoying a short term upward bounce (after 4 years of price drops from peak), but there is still a significant downside to Arizona's market.

Well, I think it's one of those things that will take a while to see how it pans out. It's very difficult to explain market volatility, and short term events, even the best get it wrong time after time. What we do know is the reduction in inventory is a recent national occurrence, not only in Arizona, and it happened very quickly (within 5-6 months).

The causes are debatable, but the effect isn't. I personally believe banks are causing the shortage through market manipulation, and with the tacit agreement of the federal government because taxpayers cannot afford another financial bailout for those institutions if they had to realize their losses on paper (though that is only a personal theory, and of course impossible to prove).

One thing I know for sure is that all the delinquent mortgages didn't suddenly cure, nor did all those empty homes suddenly get bought up.

Call it Crazy says

Many "shadow" house don't show up on ANY data point.... you can "look" for data all you want on Freddie and Fannie records but they aren't going to tell you NOTHING if the bank hasn't moved to foreclose.

They'll be on the delinquency reports, won't they? 30 day/60 day/90 day/pre-foreclosure lists...

Should be, but not always the case.

Our neighbors (60+ years old) stopped making payments sines last summer, no records on their property anywhere. They purchased it in 2007, now 5 years later deeply underwater.

After trying to negotiate with BOA for many months, they have been offered a loan modification: 50 years fixed with 3.25% interest, no principle reduction/forgiveness, plus all interest for the last year will be added to the principle.

Their current mortgage 5.25% variable for 30 years with 10 years fixed interest only.

By accepting this offer they will save about $1,000 per month, but they will be renting their property from BOA for the rest of their life.

Aha! So thats why real estate prices have been kept artificially high in the bay area! I knew that boatloads of corrupt filthy rich Chinese were not the reason.