Don't start with the tea-bagging again, you'll just get Liz worked up.

I've looked hard for a large amount of shadow inventory, I just don't see it in my neck of the woods.

http://effectivedemand.blogspot.com

Actually, let me go one step further.

For Ventura County and the San Fernando Valley... not only is there not a large amount of shadow inventory sitting on the sidelines the market is currently running out of REOs because of all the foreclosure moratoriums and the banks having difficulties getting their hands on the inventory.

You can check out the weekly interactive inventory graphs here:

http://effectivedemand.blogspot.com/2009/04/weekly-activepending-counts-...

Distressed inventory (REOs and Short Sales) is getting smaller, not larger. Plus the market on the low end is very strong right now.

http://effectivedemand.blogspot.com

Rob,

I think it depends on how you define shadow inventory. If you define it as inventory the banks have taken back but not on the market.. the number is small.

If you define it as inventory which has a NOD or NTS filed but not on the market. The number is large.

But in my book, until the banks can get their hands on the house to resell it isn't inventory. Especially considering this political climate in which massive pressure is being brought upon servicers to reduce any and all foreclosures.

http://effectivedemand.blogspot.com

Sociopath? But he has that soundboard! Don't soundboards and wacky morning-drive style hijinks count for anything anymore?

Why sell now when the proposal hasn't been hashed out yet for the "Misplaced species removal" amendment.

In the aforementioned (part of an $80 Trillion sweeping wildlife protection bill), a few hundred billion will be allocated to refurbish and tidy-up the growing wild life preserves, er, houses, that the banks are currently sitting on.

In OT news, I think my next handle is gonna be..."you don't understand finance".

For example, lets put the 100,000 number quoted in the article as Shadow Inventory for California in context.

Predicted about 470,000 home sold in CA this year. Currently REOs are about 58% of resales according to DQ. So that makes it about 4.4 months worth of REO inventory considering its absorption rate in the market. That is basically the float for servicers to get homes prepped and up on market. Some are very quick and get it up right away if there is no owner to evict or they can do cash for keys.. others it takes longer. So that number is about right and not especially large and you see the same thing in the national numbers.

http://effectivedemand.blogspot.com

Wow, Gary, that's an interesting possibility that you've raised there.

It would be another instance where the financial agencies are clearly working against the interests and stated aims of other agencies.

The banks, a fountain of idiocy, will keep the houses off the market, until they are completely stripped, vandalized, burned down, and finally used as toxic chemical dumping grounds - finally literally turning their assets into truly "toxic' assets.
You can always buy and hold something until it is more than worthless (I imagine cities will initiate a number of malign ownership lawsuites against the banks). Hmmm... than we can have a true test of Federalism - don't sue the banks, we're trying to save them!!!

Anon:"Banks don't want to realize so many losses at a time. "

Some merit to this. One of the major reasons loan modifications focus on interest rates reduction over principal reduction is that if you reduce interest rates you don't have to recognize the loss. Apparently there is no accounting rule on getting grossly underpaid on your capital on the amount of risk you are taking.

http://effectivedemand.blogspot.com

Hey, this feels like the good old bull market days. Shnaps, crispy, and other old timers with few commentators in general.

Except all the people i respect are still bearish, Hussman, roubini, rosenberg, Fleck.

I miss Tanta; would have loved to hear her insight on this.

I think regional banks, community banks, and large Money-centered banks all have VERY different motivations...incentives and disincentives ... for 'managing/massaging' the volume of assets they list or dont list.

I doubt there is a one-size fits-all set of data and explanation for any of this.
Usually in CR-Land, we dont fall for 1-size-fits-all data or explanations.

I haven't quantified it but one part of the market which is increasing is Vacant short sales. I think this is the banks way of not registering the home as a REO. The owner has gave up but the servicer asks them to list it and they will get the sale approved. On a political front, a short sale is much better than a REO for the servicers.

http://effectivedemand.blogspot.com

DMB is giving monkey's a bad name....accountability, nah

booooooyaaaaahahahhahahahhah

Three acres of snow.

" at some point you'll have to buy something"
-----

Care to make a bet on that?

'Jos A Banks sells suits and ties that people wear on interviews but never again once they have a job.'

Not around DC - but then, a shadow inventory of suits has always been a DC trademark.

Cinco-X- Huh? Why should that property be $150,000 more then the list price?

List price $269,000

If you scroll down on Zillow it gives you the most valuable information. Last sale price, assessed price for tax purposes, last taxes paid.

2009 tax assessor's value: $232,400
Sold 04/04/2006:
$248,000 *
2009 Property Tax:
$3,328

Off subject

600K 2008 Coach sells for 350K bank and dealer partnered haircut, for inventory. I'm sure yachts under simular pressure...Reality will be when there's nothing new to sell at these dealships. Direct build to order with traveling service support. Dell was just ahead of the curve...

"The U.S. Securities and Exchange Commission told a federal judge that Bernard Madoff need not be forced into personal bankruptcy to ensure that all his assets are used to pay those he stole from.

The agency today opposed a request by victims of Madoff's Ponzi scheme to push him into bankruptcy. The SEC said Madoff's assets, once recovered by the regulator and the Department of Justice, will be distributed to Madoff's victims and creditors. The victims fear that the assets wouldn't be turned over to them, the agency said. "

http://www.bloomberg.com/apps/news?pid=20601103&sid=aH6vprlzvR0s&refer=us

Why does this fail the smell test?

Suit won't matter when the job ends up being you and a shovel. Many fluff jobs will be gone.

In cases where there are HOA dues or condo association fees the lender may file a Notice of Default but then hold off on filing the Notice of Trustee Sale to avoid being assessed the dues or fees for the unit before they're ready to sell. (Tenants in these situations can sometimes stay for months or years without having to pay rent, as the landlord has abandoned the property but the bank hasn't taken it over. In some cases it's politic for the tenants to agree to pay the dues or fees, as the development management will be happy to get at least something on the property.)

I know I posted this before.

I looked at a new rental not far from the one I just signed the lease on. This was in a Meritage development. The home (3600 sqft 5/3 3car garage with every granitepregostainless doodad under the sun) sold in 04 for 640k. They defaulted in 2yr 9 mos. like clockwork. Home sat empty with no MLS listing or tenant for 7 mos. It finally "sold" to a specuinvestard LLC for 286k as part of a bulk purchase. They listed it on their inhouse service for about 5 months for 350k. The difference in the 286k vs 350k being their flipping premium. It sold to an investor in Colorado for 270k. Closed in Feb 09 and was up for rent a week later. The reason I know this is I was looking at leasing it myself and stopped by one day and was lucky to get to have a long conversation with the new owner. She was asking $1875. mo and then lowered to 1750 which is what she offered me if I'd take it starting the first.

The Mello Roos is pretty expensive so the effective property tax rate is high, there are clubhouse dues, and the HOA is another 130 mo. Unless she threw a huge amount of cash at the purchase, there is no way she is anywhere near covering the monthly payment on the place. She said she plans to hold it for a long time but does she really plan on loosing 1k a month for the next 10 years? Is that some sort of new investment strategy?

In the meantime, houses all around it are in a similar state. Some have been purchased to be rentals already and many more on their way to the rental market and they will all be competing for the same small pool of tenants. This is in a suburb of Sacramento.

Cinco

Its not a house. Just a lot with no septic done yet.

But it has been stumped!

http://www.realtor.com/realestateandhomes-detail/698-Townsend-Rd_Groton_...

I despise Relitters

So i am going to be in San Diego...May 5th-8th on business.

My question to the natives is what shouldn't I miss?

And doesn't tell me the shadow inventory or Jim the Realtor.

"1/3 of Phoenix valley homes sit empty"

http://www.azcentral.com/arizonarepublic/news/articles/1031vacant-homes1...

The way I heard it (hearsay alert: if anyone has a verification I'd LOVE to read it) the method works like this: Juan applies for a no income check mortgage for a $100k house, gets approved and then sells it to uncle Pedro for $150k on another no income check mortgage, uncle Pedro sells the house to brother Jaime for $200k. They then go back home to Mexico and split the proceeds $33k apeice.

The more complicated way, and more likely scenario is all of them buy a $100k house, then they sell to other family for $150k then they all buy again for $200k, then they all go home to Mexico.

Let's walk through it from first person perspective, just to see the details of how it works:

I, Jorge, applied for a no check mortgage loan on a $100k loan, I declared that my income was $60k and no one checks, so, I'm approved. I sell the house to a friend who is also doing the game for $150k - and I get $50k cash from the sale, which I split with the friend who bought. I apply for another no check mortgage to buy a $200k house from another friend, I'm approved. I again split the difference in price where he bought for $150k, so I pocket another $25k then I return home to Guadalajara.

Eventually the house is foreclosed on and the bank sits on it hoping that the federal government will ride to the rescue and buy the house from them for $200k.

"You would at my house"
-------

That's your problem, not mine.

A condo in my kids building has been in foreclosure for about a year now. They are still living there and have paid no HOA fees either. I bet there is a lot of inventory just like this out there.

So the consumer has gone from the Heloc's to CC's . What's next? 401k cash-outs?

Current home purchases are future inventory. Too many are sold to optimistic investors who see poor returns elsewhere and are barely able to cashflow. Many are actually losing money each month. They do so because they fear inflation and believe they'll make money on the captial appreciation. They underestimate the deflationary pressures and aren't accounting for job loss pressure, rent pressure, and the fact that rates are at the bottom so if inflation ever does come, so comes increased home loan rates....higher rates mean prices stay flat as buying power is reduced. We are set up for flat prices, or prices rising below inflation for a very long time. Current investors will throw in the towel slowly over the years keeping constant inventory pressure on the market.

Hey CR, It's springtime....We need some early hiking Pics!!! no more D&G. Spring wildflowers' , flush mtn creeks, Forest panorama's....!

Journey for thread music, man, you are even older than me lol.

I can speak a bit for the SF proper and Marin & Sonoma counties:

1) Many vacant short sales in 'middle class' areas -- and there are more the further north that you go, with foreclosures mostly in low income areas/SFH and condos... now. Last year we (myself and my appraiser cousin) noticed that quite a few 'short sales' ended up in foreclosure.

Note that we are also seeing lots of 'middle class' and 'upper middle class' properties go for sale first 'off' the MLS, as folks hope they can slow the 'days for sale' clock a bit.

I'd also note that most folks in those areas seem to still be pricing too high; now we are also seeing 'for lease' signs at some SFHs that have been for sale for over 9 months -- in great condition and in very nice locations.

2) The banks are sloooooow as molasses getting properties on the market and doing deals. I guess the few actual do-the-work staff left are swamped, and due to all of the banks-eating-other banks, aren't exactly working at a high rate of efficiency. I know one REO staffer who didn't have a phone or email for two weeks...

If the numbers don't match, something stinks. There are lies, damned lies, and then there are statistics. (Apologies to Mark Samuel Clemens Twain for mangling his quote)

"just the dawning realization that the honest man is a fool in this country"
-------

Yes, exacctly.
I did the college thing.
Then I did it again.
i've been jacked around by scam companies for the past five years.
And now I'm getting jacked around again with 20% paycut offers and now I'm facing age discrimination.

It's all a big crock of shit.

The TARP thing will increase the politicization of private industry jobs to an even worse degree, which means no honest person can expect to get anywhere now.

It's time for crime.

"Hell, by the time it's over kids may be enlisting in the military to get the sign-up bonus for their families, if those are still offered. "

Whats that going to do to the mercenary industry?

Any way to short Blackwater?

You know time are bad when Americans have to go fight their own wars!

This is Real_Folks: Yeah, I live just outside of Quantico and the townhouses have been hit hard. However, I have managed to find someone who is willing to buy my house for what I owe on the mortgage (versus what the county just assessed at) as he was sick of looking at foreclosure after foreclosure and wanted a place that was in decent repair.

Everyone has this backwards.....prices aren't dropping because there are too many empty houses.....there are empty houses because prices are dropping!

Any measurement that shows inventory dropping won't affect prices. Prices are going to where they should be based upon what people can afford to pay. The huge rise in prices didn't come from a squeeze in inventory, it came from easy lending standards and a bubble mentality. Supply rapidly increased as prices rose. If normal supply and demand issues reigned the fierce building over the last several years would have reduced prices, not keep them rising.

If supply gets absorbed at some point, you still won't get people overpaying for a house unless lending standards are eased. It's hard to imagine any easing from this point. I paid $178,000 for my house in 1995 because that is what the bank would lend me on $80,000 AGI. If standards get back to that, I don't care how tight supply is, a buyers is not going to be able to overpay for a house.

I've discovered that prices shown in zillow and realtor.com aren't always what they're cracked up to be. I saw a few homes that looked ridiculously cheap and called the listing agent. It turns out that the homes were to be auctioned off and the price listed was the starting price.

I live in a Maryland suburb of Washington DC and the housing market here is different than anywhere else. What's happening is home that are at the higher end, say $600k and up and having very large price reductions while the less expensive homes aren't. I think I've figured out why.

By far the biggest employer around here is the federal government. Most either work directly for the government or work for a company that provides a service to the government. Consequently, the unemployment rate is very low. Montgomery County has an unemployment rate of about 5%. I suspect there are two unemployment rates. One for former private sector workers, which is probably high, and the other for former government workers, which is probably very low.

Working for the government is good for job security, but it's bad for top level pay. Almost all government workers earn between $50k-$150k. There are probably 5 workers earning under 100k for every worker earning over 100k. A typical household of government workers (Mon and Dad both working) probably earns about $150k. Not enough to buy a house over $600k, but enough to afford a house in the $400k-$500k range. So what you have is decent demand for a $400-500k house, but very little demand for a $700k+ house. I've seen many houses with a peak Zillow price of around a million going for around 700k, but homes with a peak zillow price of say $500k are only being marked down to 450k. If you're looking at a $500k house, if you can pony up an extra $150k, you can get twice as nice of a home.

Apparently, there is now a new thread: http://www.hoocoodanode.org/node/6542

Faked homes and fraud borrowing?

In OC, I'm seeing homes that have waaaaaaay past their auction dates, sit empty. The owners stop making payments, go through the foreclosure process, move out and yet tax records still show them as legal owners (6+ months later).

We've been trying to buy a house for 3.5 months. Have made 5 offers.
On one of the houses, our first contact with the bank (short sale) was when after a month and only a month to go till closing, they said they needed another month. But they had not yet accepted our offer. Told them to stuff it; house is back on the market.
Our last house, currently has an offer(ours) pending and was for sale for $127k and needed a new septic. We offered $120k and needed a loan of $16k for the septic and appliances (none there) and a FHA 203k loan. They countered with $127k, DUH!!. We countered with $135k and they could install the septic because our ratios would not let us go higherfor a 203k. They countered with $116k, cash only. We countered with $117 and the $16k for the 203k loan. Still waiting to hear.
Are they using new math??

I live in Sacramento. In the nicer inner areas there are lots of empty houses, weeds growing, some with emergency call #s but most not. I walk daily and many of the houses sit empty without sales signs for months. I also have called the agents for several empty but for sale houses only to be told the house is "on hold." Again, months of sitting without any movement. Sellers in these areas are still asking for bubble era prices. The bottom end of the market seems to be near bottom but the upper 2/3 are stagnant.