Where Is The End Of This Shadow Inventory?
Readers suggested a topic on the foreclosure market. “I have noticed that Fannie and Freddie Homepath and Homesteps programs have attractively priced homes. Supposedly aimed at first time home buyers. The interesting thing is that I have called on several and have failed to get even a showing on them because; on the attractively priced ones at least; there is an offer on the home within minutes of it hitting the website. So how does an unconnected buyer get a fair shake? Isn’t there so much shadow inventory that every eligible new buyer should be considered and given a chance?”
“Should a buyer who wants a good deal wait for the market to be flooded? Or will the banks ever let that happen; will they stretch it out to decades? So Fannie owned stuff is rather picked over at this point; but fresh inventory is waiting in the wings. Foreclosure auctions by BofA thru Recontrust have been suspended since last October. Seems largely clogged up; our home has been rescheduled 4 times and we are not even trying to contest it! Wonder if the August auction on wife’s home, where we live but haven’t paid since last March, will be rescheduled again as well?”
“And the numbers of non-payers who are also stayers is growing and growing! Since the stigma is gone; less uhauls are coming and going in the night to leave props abandoned and neighbors scratching their heads. People are clued into the free rent aspect of not being able to afford their mortgages, so some are staying rather than leaving in shame.”
“Where is the end of this shadow inventory, when the price is the price, and everyone is given a fair shake?”
A reply, “Keep reporting the bad agents. If your agent won’t do it, do it yourself. Write letters to the sellers and banks if you are ever refused a showing.”
“You would think the banks would have caught on by now. On many listings I now see them refusing offers for the first 25 days on market. That probably helps. I figure it won’t be long before they’ll be listing the house with two different agents simultaneously (winner takes all) - that might help cut down the questionable antics.”
Another said, “If you come in with another realtor the agent has to split the commission. If it really is a good deal, he or she would much rather not show it, keep the price low, and steer it to one his investors. Repeat, repeat, repeat. Hell, he or she can even agree with his or her investors to split the profits on the flip. Not ethical, but done every day. If the listing Realtor has their eye on it for one of their investors, you do not stand a chance. Only the picked over properties actually have non-hand picked showings.”
The Desert Sun. “Foreclosure activity in the Coachella Valley plummeted by more than one-third in May compared to the same month a year ago, marking the second straight month with a significant decline, a new report shows. It’s an encouraging sign, economists and area real estate professionals said, but it will still take years for lenders to unload all of the homes and condominiums remaining in the valley’s foreclosure pipeline.”
“‘It isn’t over by any means, but I think we’ve reached the peak of foreclosures and now we’re headed the other way,’ said Jim Franklin, president of the Palm Springs Regional Association of Realtors.”
“James Saccacio, chief executive of RealtyTrac, cautioned that as new foreclosure activity has declined steadily in recent months, the inventory of unsold bank-owned properties nationwide actually increased in April and May. ‘That points to continued weak demand from buyers, making it tough for lenders to unload their … inventory,’ Saccacio said. ‘Even at a significantly lower level than a year ago, the new supply of bank-owned properties exceeds the amount being sold each month.’”
“There is also some concern among some housing industry analysts about the size of the ’shadow inventory,’ or homes ready for sale but that are being held off the market. Franklin doesn’t believe the valley’s shadow inventory is a major concern. ‘The homes I’ve seen that have been foreclosed on have come back onto the market within two or three months,’ about the time it takes to clean and fix them up, Franklin said.”
The Bakersfield Californian. “Our question: How concerned should prospective buyers be about the excessive number of homes in shadow inventory?”
“Scott Tobias, President-Elect, Bakersfield Association of Realtors: There is no doubt that the number of foreclosed properties and those that will be foreclosed will affect the real estate market. How it affects price depends a lot on how many are put up “for sale” at any given time. If supply gets too far ahead of demand there will be a decrease in prices. Knowing that too much inventory will affect prices negatively will probably keep banks and asset managers from dumping houses on the market all at once.”
“So, should buyers wait to see what happens? Based on the availability of financing at very favorable rates and terms, this a very good time to buy. There is no certainty that the favorable financing will remain in the future any more than wondering if prices will hold. The point is, at the prices we are seeing now it is unlikely they will drop very much lower and in the long run they will increase.”
“David Cates, president, Lenox Homes: ‘I don’t think homebuyers should be concerned. Shadow inventory is driven by the lending institutions. I think that the shadow inventory right now may very well heal itself.”
“Last year there was talk of about 4,000 homes hanging out there in the shadow. All the prospective clients pulled back waiting to see if there’s a better deal in these REO/shadow markets. People waited and nothing happened. Ultimately, the shadow inventory came out in pieces.”
“Our market is the first-time homebuyer. They’re very, very conservative and don’t want to make a mistake. They don’t want to be the one that buys the house as the market’s going down. I believe the lenders will continue to bring it to market in a piecemeal format. I think that we’re absorbing the units. People will hold out, maybe. They might sit on the fence a little longer. But, all in all, when it gets down to it, it’s not going to affect those decisions.”
