patrick.net

Think what you want about the Contra Costa Times, but this was not an op-ed piece. The interesting part is what ForeclosureRadar said. It is in FR's interest to promote a "shadow inventory" so people will sign up for their service. Instead they say the opposite, that the number of bank owned properties is dwindling. Are you now going to claim that FR is also a jackal beholden to the real estate industry, rather than address the numbers and facts?

Just noticed this is from the SJ Mercury News, rerun by the CC Times. Educate me, is the SJ Mercury News also a jackal beholden to th RE industry?

I can drive through a prospective neighborhood and see that 30 houses are for sale or foreclosed, yet only 10-15 appear on the web as for sale. If those other houses aren't in the shadow inventory, then where are they?

What about all the people behind on their payments? The people just waiting to sell if prices would rise just a tiny bit more?

StoutFiles says

I can drive through a prospective neighborhood and see that 30 houses are for sale or foreclosed, yet only 10-15 appear on the web as for sale. If those other houses aren't in the shadow inventory, then where are they?

What about all the people behind on their payments? The people just waiting to sell if prices would rise just a tiny bit more?

It depends on what you mean by shadow inventory. There are well documented statistics of 30/60/90 days behind on payments. And actual foreclosures.

So, in my mind, there's nothing shadow about that. You can know with a pretty good degree of certainty how many foreclosures are coming down the pipeline, even if you don't know exactly when they'll hit.

StoutFiles says

then where are they?

pocket listings.. which also understates stats..

"it is never advertised nor entered into a multiple listing system (MLS), or where advertising is limited for an agreed-upon period of time. In Canada, this is referred to as an "Exclusive Listing""

http://en.wikipedia.org/wiki/Pocket_listing

tatupu70 says

It depends on what you mean by shadow inventory. There are well documented statistics of 30/60/90 days behind on payments. And actual foreclosures.

I mean the definition:

A term that refers to real estate properties that are either in foreclosure and have not yet been sold or homes that owners are delaying putting on the market until prices improve.

You are right, there's nothing shadow about that, but the info is not easily available. Most buyers do not know that information; it's not like realtors are going to share it, and it's not like the big internet sites are showing it. They all want you to pay money for foreclosure info.

wave9x says

Educate me, is the SJ Mercury News also a jackal beholden to th RE industry?

Actually, I think that the SJ Murky News is the worse of the two. They have been running pieces about how housing is "back" and how rents are up & experts say to buy for a number of weeks. While the main points are not disagreeable per-se, the articles read like NAr bulletins. I'd say that what I have seen in the CC times has generally been pretty objective in the past (some here may be ignoring this). They ran many pieces about how Central Valley cities are being devastated by foreclosures. Them running a SJMN piece...they are really slumming it these days lol.

yes, certainly the SJMN are jackals... they proved it when they ran a 4 piece article stating that the inflated prices UP over 100% by 2001-02 were justified ... and have not retracted those same comments since! They simply are not journalists.

Next time... check the bios of the writers .. they have only been in the Bay Area for the past 10-12 years. The big events since dot.com , housing bubble, or the idiotic FaceBook (splat) IPO are all been overhyped by SJMN as ifs normal... I dont think these writers really understand what normal around here is.

I don't think that MOST people understand what "normal" is around here. Then again, for how long do things need to be abnormal until they become the new normal? It's been silly here for well over a decade now, and a lot has fundamentally changed here. Who's to say that it will go back to that? The people that "built" this area in the normal times that we remember are somewhere between retiring and dying. They have been replaced by millions of transplants that don't know anything of this area beyond, "good jobs here, make money, work more and make more money, you don't have enough money work harder, buy a nice car, buy a house, get more money work more."

What we need is a good repeat of 1989. Maybe that will shake things out a little.

bmwman91 says

What we need is a good repeat of 1989. Maybe that will shake things out a little.

Which part of 1989, the earthquake, the recession or the fall of east European communism?

Mostly the earthquake. I was 5 and standing on a giant toy dumptruck in the front yard...that shit was FUN.

bmwman91 says

Mostly the earthquake. I was 5 and standing on a giant toy dumptruck in the front yard...that shit was FUN.

I was *ahem* a bit older and watching waves in our swimming pool large enough to surf on. OK maybe that a bit of an exaggeration but damn it was fun!

Still had I been one of those homeowners who's house was wrecked and not covered by insurance I would have felt very differently.

I dunno dude, the deductibles on earthquake policies are like $50k. It's almost a "why bother" situation. But yeah, glad your house didn't get wrecked. All my parents lost was a monochrome PC monitor.

With interest rates like this, housing will be bought by investors, speculators, and savers. Still, for single guy like me who can handle living in crappy apartments, it's senseless to buy anything RE. Property management will become the next hot thing, just like credit collectors did. It's all about creating a service industry behind all this crap, inflating the market overall, and that's the policy of the fed.

New renter says

Which part of 1989, the earthquake, the recession or the fall of east European communism?

neither anyone of these created the recession for our local SF south bay economy.

The Japanese pretty much wiped us out with their practice of dumping products below production costs on the US market. Not to mention coping products ignoring our IP rights. That is why we dont have much mfg in Silicon valley. And there was a trickle effect which hit many other non-semi tech companies, except software. Our SV software companies were pretty much left to Microsoft to feast on.. and MSFT feasted well as many SV Software companies wiped out. You do recall the Govt going after MSFT in the mid - late 90s?

http://semimd.com/lammers/2012/02/27/japan%E2%80%99s-dram-makers/

Today, as seen by the Apple - Samsung law suites... Koreans are the ones practicing dumping/coping products on world markets, thus keeping US mfg our of the market.

Earthquake had little impact on our economy! USSR was much later in 1991-92 when we were already deep in a recession.

bmwman91 says

the deductibles on earthquake policies are like $50k

a sober reason not to see highly inflated homes near earthquake zones...
and if it comes to that.. there wont be any insurance to cover the all damages..

bmwman91 says

I dunno dude, the deductibles on earthquake policies are like $50k. It's almost a "why bother" situation. But yeah, glad your house didn't get wrecked. All my parents lost was a monochrome PC monitor.

That's my point. Few people get the insurance as it tends to be very expensive and covers little. Unfortunately homeowners insurance does not cover damage caused by an earthquake.

thomaswong.1986 says

Earthquake had little impact on our economy! USSR was much later in 1991-92 when we were already deep in a recession.

We have two faults the Hayward and the Calaveras here in the SFBA overdue to deliver an 8.0 or greater. That's at least 10x more energy than the '89 quake. The impact on our economy depends on the damage. How well do you think SFBA business will fare if the bridges, BART and overpasses are heavily damaged, gas and electrical lines lines rupture, the Chevron refinery is wrecked (think of the recent spike in prices just due to the fire). Then add damage to residential and commercial RE. How likely are YOU to go to work if your house is badly damaged?

Remember the '89 quake happened during the world series in which the Oakland A's were playing the SF Giants. Lots of BA families were at home watching the game, NOT driving home from work as they would normally have been at that time of day. Many more people would likely have been pancaked on the Nimitz freeway:

http://en.wikipedia.org/wiki/1989_Loma_Prieta_earthquake

It could have been much worse!

The Berlin Wall fell in 1989. That was the beginning of the end for communism.

Well, it'll be a double whammy if the next big one happens on April 4 of some year. A large segment of people here will probably freak out. Similarly, if it happened on August 8 it might have the opposite effect..."the earth is busy shaking up riches!"

bmwman91 says

I dunno dude, the deductibles on earthquake policies are like $50k. It's almost a "why bother" situation. But yeah, glad your house didn't get wrecked. All my parents lost was a monochrome PC monitor.

Exactly. The earthquake deductible is like $30k to $50k, and their coverage is only up to $150k. It almost doesn't make sense to buy earthquake insurance if you have a stick built home.

New renter says

Then add damage to residential and commercial RE. How likely are YOU to go to work if your house is badly damaged?

Remember the '89 quake happened during the world series in which the Oakland A's were playing the SF Giants. Lots of BA families were at home watching the game, NOT driving home from work as they would normally have been at that time of day. Many more people would likely have been pancaked on the Nimitz freeway:

http://en.wikipedia.org/wiki/1989_Loma_Prieta_earthquake

Yes I was here "at work" when it hit.. and many were NOT impacted. Many people went back to work 2-3 days later. By the following week it was back to normal for many. YES I WAS THERE.... that in 1989 quake wasnt a big deal in the southbay.

There are deep and shallow earthquakes... there is a difference.

we dont get deep earthquakes like other places get.

http://en.wikipedia.org/wiki/Earthquake#Shallow-focus_and_deep-focus_earthquakes

E-man says

and their coverage is only up to $150k. It almost doesn't make sense to buy earthquake insurance if you have a stick built home.

it doesnt make sense to overpay well beyond $150K when buying a home.

Those who hope for the shadow inventory to crash the market remind me of those types in Vegas when you are gambling and someone keeps betting on "7" and keeps loosing but saying "Wow! It's GOTTA HIT eventually!! I feel it coming"
:)

SubOink says

Those who hope for the shadow inventory to crash the market remind me of those types in Vegas when you are gambling and someone keeps betting on "7" and keeps loosing but saying "Wow! It's GOTTA HIT eventually!! I feel it coming"
:)

Statistically speaking one WILL roll a seven eventually - unless of course the dice are loaded. The trick is to roll the seven and win big enough to cover all previous losses.

New renter says

SubOink says

Those who hope for the shadow inventory to crash the market remind me of those types in Vegas when you are gambling and someone keeps betting on "7" and keeps loosing but saying "Wow! It's GOTTA HIT eventually!! I feel it coming"

:)

Statistically speaking one WILL roll a seven eventually - unless of course the dice are loaded. The trick is to roll the seven and win big enough to cover all previous losses.

This ZIRP economy = martingale system

thomaswong.1986 says

Yes I was here "at work" when it hit.. and many were NOT impacted. Many people went back to work 2-3 days later. By the following week it was back to normal for many. YES I WAS THERE.... that in 1989 quake wasnt a big deal in the southbay.

Of course there is also this historical example of what a major earthquake in the SFBA can look like:

http://en.wikipedia.org/wiki/San_Francisco_Earthquake

Of course building codes have changed significantly since then. That will make a huge difference. Still the BA has also become MUCH more populated. Its hard to accurately predict exactly what the damage in a major quake will be.

Something interesting about the 1906 quake was that a good portion of the damage was caused by intentionally set fires. Insurance companies did not cover earthquake damage but DID cover losses from fire. I would venture to say in that regard history could well repeat itself.

Unfortunately....nearly a decade after the first rapidly muted visionairies uttered that maybe possibly real estate was NOT going to continue to rise in value at astronomical amounts forever and ever.......we still have a media that greedily accepts handjobs from the real estate cartel....and we still have people who very well know the truth blatantly posting lies on the internet.

And the truth is that in upscale markets(ie coastal LA, OC, SD, and Bay Area...and yes even with low interest rates, $500K homes are homes affordable only to upper middle income families...those with a household income of ~$125K or greater which by all objective measures is upper middle class), there are MANY houses were the mortgage is no longer paid, yet the banks have taken no action on the homes whatsoever. No NOD, no short sale, no foreclosure, no anything.

This house is a great example.

http://www.redfin.com/CA/Burbank/745-N-Evergreen-St-91505/home/5389247

Last sale was in the early 80's at $122K. But its not listed on Redfin. LOL I suppose someone didn't want anyone knowing that the prior owners soaked the banks for around $600K and put NONE of it into fixing up the house. I dunno what they did with that money, but it sure buys a whole bunch of blow and hookers. More likely granny and gramps had a serious gambling problem.

Anywho, how long has it been since someone could HELOC that much out of a home like that? You figure that after 20 years, that mortgage is at $50K or less, and they HELOC near the top of the market to the point where the outstanding mortgage is $642K.....prices for a beat up home in Burbank havent been that high since...oh....2006.....

Now I suppose its possible that granny and gramps used the $600K to pay off that HUGE HELOC note....or maybe not.

Maybe, just maybe, theyve been living scott free while the government gives the banks a handie every few months.

The way I see it, that property was in shadow inventory for 3-5 years.....No payments being made, but the banks making no effort to collect whatsoever.

But nah, theres no shadow inventory. All a myth, and whatever there was is almost all gone.

Riiiiiiiiiiightttttt..........

dodgerfanjohn says

But nah, theres no shadow inventory. All a myth, and whatever there was is almost all gone.

The sheer existence of shadow inventory is not the myth. It's the prediction that because of it the market will crash 20% that is the myth. Big Difference.

SubOink says

dodgerfanjohn says

But nah, theres no shadow inventory. All a myth, and whatever there was is almost all gone.

The sheer existence of shadow inventory is not the myth. It's the prediction that because of it the market will crash 20% that is the myth. Big Difference.

I'm saying that the scenario I described is very common. Common sense would dictate that the scenario is being vastly understated since its not a situation that anyone other than the banks could actually measure. And they are not, or at least not stating what they know.

As Call It Crazy points out, it would only take a fairly small number of these homes hitting the market to depress the market, and then all hell could break lose if people who are underwater toss in the towel and stop paying as well.

Probably the reason in fact that the banks won't tell how many people stopped paying on the mortgages. Issuing a NOD would in fact make that number known. So they don't issue a NOD and make no effort to collect on the mortgage. It would break every bank in the country.

dodgerfanjohn says

As Call It Crazy points out, it would only take a fairly small number of these homes hitting the market to depress the market, and then all hell could break lose if people who are underwater toss in the towel and stop paying as well

Like Roberto says--if these people have kept paying their mortgage for the last 4 years, why would they stop now?

Call it Crazy says

What happens when the rest of these underwater home owners decide to say "screw it, it ain't worth it" and mail back the keys to the bank??

Mail back the keys and then what? - ruined credit, loose your house, go back to renting which isn't cheaper, have to start all over? I don't think anybody wants to do that just like that. It isn't like returning a book to the library.

robertoaribas says

dodgerfanjohn says

As Call It Crazy points out, it would only take a fairly small number of these homes hitting the market to depress the market, and then all hell could break lose if people who are underwater toss in the towel and stop paying as well.

Over 50% of Phoenix loans have been underwater for more than 4 years now... So, if what "call me lazy mabye" says were true, precisely why does it keep not happening month after month? Phoenix is seeing precisely the OPPOSITE: Lower levels of foreclosures, and lower percentages of loan delinquencies. Meanwhile, prices are rising, which lowers both of those factors going forward.

How do you know they are paying their mortgages?

dodgerfanjohn says

How do you know they are paying their mortgages?

If not, they'd be delinquent.

Call it Crazy says

tatupu70 says

dodgerfanjohn says

How do you know they are paying their mortgages?

If not, they'd be delinquent.

If there has been no NOD filed, how do you know? Did they call you and tell you??

No-- I don't think they have my number.

Fortunately banks are required to report delinquency statistics so there really is no guesswork...

tatupu70 says

Call it Crazy says

tatupu70 says

dodgerfanjohn says

How do you know they are paying their mortgages?

If not, they'd be delinquent.

If there has been no NOD filed, how do you know? Did they call you and tell you??

No-- I don't think they have ny number.

Fortunately banks are required to report delinquency statistics so there really is no guesswork...

Really? When and where do they file that?

dodgerfanjohn says

Really? When and where do they file that?

SEC filings. But then again, if the numbers don't fit your preconceived notion, you'd say that the lenders are lying. So what's the point?

E-man says

SEC filings. But then again, if the numbers don't fit your preconceived notion, you'd say that the lenders are lying. So what's the point?

Yeah because banks like Chase, BofA, and Golds never lie about their internal numbers. They are truly institutions of unquestionable accounting ethics.

Goran_K says

E-man says

SEC filings. But then again, if the numbers don't fit your preconceived notion, you'd say that the lenders are lying. So what's the point?

Yeah because banks like Chase, BofA, and Golds never lie about their internal numbers. They are truly institutions of unquestionable accounting ethics.

It's just sad that you bears argue based on emotion and not statistics. John asked where to go & get the data & I showed him. Then you countered about the banks never lie about their numbers. Since you bears have no concrete numbers, you bears wildly guess the "shadow inventory" number to fit your preconceived notion. Also, when you bears can't beat with a countered point, you give the poster a "dislike".

It's just sad going through life like this.

Call it Crazy says

You haven't showed us squat.... all you did is make a counter statement without ANY proof....

Post some specific links to these SEC filings showing us all these NOD's and where the banks have reported them, otherwise your argument holds zero weight!

I think the person who hasn't shown us squat is you. Where is the solid evidence of a massive "shadown inventory" looming, ready to tank house price? Statistics about underwater homeowners doesn't prove a shadow inventory exists. Nether does paranoid speculation about bank conspiracies, lies, and cover-ups. The data thus far, according to ForeclosureRadar and others, is a shrinking inventory of bank-owned properties.

E-man says

It's just sad that you bears argue based on emotion and not statistics. John asked where to go & get the data & I showed him. Then you countered about the banks never lie about their numbers. Since you bears have no concrete numbers, you bears wildly guess the "shadow inventory" number to fit your preconceived notion. Also, when you bears can't beat with a countered point, you give the poster a "dislike".

I disliked my own post. So now let's get past that and discuss the real topic.

If you don't question the accounting ethics of the major banks, you have to have blinders on. This has been a huge overhanging question about the banks throughout this market crash. Just recently James Dimon was put into the front of Congress to explain how they flushed $2,000,000,000 of investor money into the toilet. Banks are simply not seen as trustworthy when it comes to their internal numbers because of the simple fact they are very creative when it comes to reporting them sometimes.

Goran_K says

If you don't question the accounting ethics of the major banks, you have to have blinders on.

There's a big difference between accounting ethics--making questionable interpretations of the standard-and outright lying to the SEC.

Painting the two as if they are the same is a bit simple.