"4 weeks and then all hell breaks loose"

[No_Such_Reality_IHB]

You won't get the true numbers on Monday. It will be a week or more (especially with Labor Day coming up) before everything is updated. Your point about the investor purchases doesn't change things much because some of what you thought were normal sales in August were themselves investor flips bought at auction in recent months.

I was talking about the foreclosures, they'll be updated by Tuesday most likely. The MLS data won't be up to date until the end of September. But that's about how accurate it is to.

You're missing the point. REOs or investor own foreclosures are climbing as a ratio of over-all sales. Like the IE, there is a tipping point. Organic sellers, which are in short supply, simply are closed out. Anything that forces organic selling aka distressed sales, divorce, job loss, moving, etc, becomes a problem. They can't compete the market and become foreclosures themselves.

 

[NewportSkipper_IHB]

Oh, I thought you meant the sales #s on Monday. I'm not missing the point, the market still has issues to work out. There were 18 short sales already closed in Aliso Viejo in August too. That's 18 units that will not become REO. All over Orange County, large numbers of distressed properties have been churned, maybe 25,000 units or more. Those still paying will need a change of landscape to reach the tipping point. Many people are committed to waiting out this cycle. That's what I am hearing in my little corner of the world, for what it's worth.

Where do you get the foreclosure list? The only one I know about only goes back 7 days.

 

[No_Such_Reality_IHB]

My data comes from ForeclosureRadar, like the others.

Those sellers waiting it out are another form of shadow inventory, but as long as they don't have to sell, then they're not inventory at all. They're counterbalanced by the buyers, many on this blog, sitting it out, waiting for prices.

Who can wait longer? Who knows, maybe it's irrelevant.

But, I suspect places like Irvine, with nearly 100,000 housing units, and 60,000+ owner occupents, can't sustain 200 sales a month. I don't know how many sales per month Irvine needs to maintain mobility and a healthy non-stagnant economy. I suspect it's much higher than 200/month sales. That's a separate question I've never found an answer for, if you take a mid-size economic area, what percentage homes need to turn-over on an annual basis for the housing market to be healthy enough to support a healthy economy and mobility required or desired.

We're all in a giant waiting game at the moment. What changes first? Financing terms? Pricing? Family situation? Employment situation? They all drive buyers to move and sellers to sell.

 

[RobertLarsen_IHB]

I'm a little confused about the FR list. I haven't had time to go through it yet, but I was just looking at it and it has a column for owner. The majority of the owners are actual people and not a bank. Only about 1/3 list the bank that is the owner. And the ones that I have cross checked so far have all been purchased in the last 6 months by the owner that is listed.

Nevermind, that was just on the list of 188. There's only a handful on the list of 70.

 

[NewportSkipper_IHB]

I meant that my friends are saying that have no desire to move at all, not that they desire it and can't or won't. They believe values will recover eventually. Maybe they are wrong, but that's what virtually everyone I know thinks and that may become a self-fulfilling prophecy. Considering where they are, and the damage that is already done, waiting it out may be the smart thing to do. How else can that money ever be recovered? Irvine turned over around 16k properties between 2000-2005, that's around 222 a month. Not really far from the current pace at all.

 

[RobertLarsen_IHB]

I finally went through the list of REO according to FR, so kindly sent by awgee, and here are my findings.

Of the 70 total REOs listed in zip code 92656 by Foreclosure Radar...

4 were duplicates

5 Auctions

1 Pre-Foreclosure

3 Not shown to be owned by the bank according to title

28 listed on the MLS

________________

Total of 41

Of the remaining 29...

1 was taken by the bank between 8/15/2009 and 8/30/2009

8 were taken by the bank between 8/1/2009 and 8/15/2009

9 were taken by the bank between 7/15/2009 and 7/31/2009

3 were taken by the bank between 7/1/2009 and 7/15/2009

6 were taken by the bank between 6/15/2009 and 6/30/2009

0 were taken by the bank between 6/1/2009 and 6/15/2009

2 were taken by the bank between 5/15/2009 and 5/30/2009

* The results of the remaining 29 show the date that the most recent bank took possession of the property.

What was interesting to me was to see the number of properties exchanging hands between banks. Quite a few properties have been owned by 3,4, and even 5 different banks. I'm assuming that they were a part of a larger asset bundle purchase.

As I've been saying before it does take a pretty long time for banks to list properties on the market, between 30-90 days. The oldest REO that I could find was on 5/26/2009. I plan on keeping the list of REOs and checking every 15 days to see what has happened to the remaining REO properties. My guess is that the majority of them will sell or transfer to another bank within the next 2 months.

 

[graphrix_IHB]

4 were duplicates

5 Auctions (what do mean by this?)

1 Pre-Foreclosure (what do you mean by this?)

3 Not shown to be owned by the bank according to title (sometimes it takes a while for it to record, but it is most likely bank owned, can't exclude them from the data)

28 listed on the MLS

________________

Total of 41

Please clarify the above questions. I have other sources to cross reference them to see if they have been foreclosed on, and please give the address so that I can.

And, why didn't you go through the 188 properties I gave you? I bet I can find more if I use that list.

 

[awgee_IHB]

Dr. Housing Bubble on the myth of shadow inventory.

 

[irvine_home_owner_IHB]

I guess it depends on your definition of "shadow inventory".

Bill Clinton Real Estate wins!

 

[NewportSkipper_IHB]

Dr Housing Bubble? That's quite a list they put together! What happened to the homes left standing after the magnitude 8.0 earthquake, that no one will buy because everyone will be gone from California? I can't believe this nonsense. There is a small amount of real shadow inventory that is really working its way onto the market. The only other shadow inventory is defaults that make it to the bitter end.

 

[RobertLarsen_IHB]

4 were duplicates

5 Auctions (what do mean by this?)

1 Pre-Foreclosure (what do you mean by this?)

3 Not shown to be owned by the bank according to title (sometimes it takes a while for it to record, but it is most likely bank owned, can't exclude them from the data)

28 listed on the MLS

________________

Total of 41

Please clarify the above questions. I have other sources to cross reference them to see if they have been foreclosed on, and please give the address so that I can.

And, why didn't you go through the 188 properties I gave you? I bet I can find more if I use that list.

4 were duplicates

5 Auctions (what do mean by this?)

- Courthouse foreclosure auction. These auctions are not listed in the MLS, and are not able to be viewed prior to winning the auction.

1 Pre-Foreclosure (what do you mean by this?)

- allows a defaulting borrower to sell the mortgaged property to satisfy the loan and avoid foreclosure. Shortsale is a preforclosure.

3 Not shown to be owned by the bank according to title (sometimes it takes a while for it to record, but it is most likely bank owned, can't exclude them from the data)

- Can't exclude them? You can't include them if there's no record, you can't include a property in the data if it's based on probability. Plus, even if it just hasn't been recorded yet, that means that it just became an REO and I wouldn't classify it as Shadow Inventory. I will also keep my eye out on those properties in the next 2 months.

28 listed on the MLS

Is there 188 REOs in 92656 or 70? I looked at the list of 188 and right of the bat I saw conflicting data. There are dozens of properties listed as bank owned but at the same time had "Joe somebody" as the owner. And when I looked it up on title, it showed that either "Joe Somebody" is not even in default or recently purchased the property from the bank.

 

[RobertLarsen_IHB]

Dr. Housing Bubble on the myth of shadow inventory.

So many things to say about this article, especially Calculated Risks categories of Shadow Inventory.

1) New high rise condos - There are high rise builders out there that have decided to put the project and sale completely on hold. That is the builders decision and you can't blame the Census Bureau for not listing them, if they are not actually for sale.

2) Foreclosures in process - This is like saying John Doe needs to sell his house to keep his business afloat, but his hasn't listed his house yet... so it's shadow inventory. If people don't have to list their house and they don't, you can't call it shadow inventory. There are many many people that are delinquent on their mortgage just to give them a better chance at a loan modification, and in fact, they can afford their payments. They just don't want to pay that much if they don't have to.

3) Homeowners waiting for a better market - Are you kidding me? This category is just a joke in my opinion. I can just throw out unjustified numbers too. The same people that are waiting to sell, are waiting to buy another home. So it's a wash. If they don't want to sell at the moment, how can you include them in a category of shadow inventory? No matter at what point during a real estate cycle, there are always going to be people waiting to sell, whether its due to financial, economic, employment, or family reasons.

4) REO - There only justifiable category to consider shadow inventory. Since there is a delay from the moment a bank takes a property to when it gets listed on the MLS, both will always be at different levels, and both will reach their peak at different moments. Not to mention the auctions that are not listed on the MLS, or the bulk purchases made by investors.

I'm not saying there is no shadow inventory. I'm saying there is no bank conspiracy to hoard REOs, and prevent them from reaching the market. The shadow inventory that is out there is purely a result of inefficient banking. (i.e. the delay from the moment a bank takes a property to when it gets listed on the MLS, or sold).

 

[irvine_home_owner_IHB]

I'm not saying there is no shadow inventory. I'm saying there is no bank conspiracy to hoard REOs, and prevent them from reaching the market. The shadow inventory that is out there is purely a result of inefficient banking. (i.e. the delay from the moment a bank takes a property to when it gets listed on the MLS, or sold).

Really? Did you also think banks didn't look the other way when it came to qualifying for exotic loans?

I'm a bit more skeptical. I think banks do whatever benefits them... maybe they don't have enough manpower to push them through... but I also don't think they aren't in any rush since us taxpayers are funding their "non"-effort.

EDIT: Double negatives.

 

[NewportSkipper_IHB]

I wouldn't even call it ineffeciency. This data proves the process is working in a very normal fashion:

1 was taken by the bank between 8/15/2009 and 8/30/2009

8 were taken by the bank between 8/1/2009 and 8/15/2009

9 were taken by the bank between 7/15/2009 and 7/31/2009

3 were taken by the bank between 7/1/2009 and 7/15/2009

6 were taken by the bank between 6/15/2009 and 6/30/2009

0 were taken by the bank between 6/1/2009 and 6/15/2009

2 were taken by the bank between 5/15/2009 and 5/30/2009

 

[graphrix_IHB]

4 were duplicates

5 Auctions (what do mean by this?)

- Courthouse foreclosure auction. These auctions are not listed in the MLS, and are not able to be viewed prior to winning the auction.

1 Pre-Foreclosure (what do you mean by this?)

- allows a defaulting borrower to sell the mortgaged property to satisfy the loan and avoid foreclosure. Shortsale is a preforclosure.

3 Not shown to be owned by the bank according to title (sometimes it takes a while for it to record, but it is most likely bank owned, can't exclude them from the data)

- Can't exclude them? You can't include them if there's no record, you can't include a property in the data if it's based on probability. Plus, even if it just hasn't been recorded yet, that means that it just became an REO and I wouldn't classify it as Shadow Inventory. I will also keep my eye out on those properties in the next 2 months.

28 listed on the MLS

Is there 188 REOs in 92656 or 70? I looked at the list of 188 and right of the bat I saw conflicting data. There are dozens of properties listed as bank owned but at the same time had "Joe somebody" as the owner. And when I looked it up on title, it showed that either "Joe Somebody" is not even in default or recently purchased the property from the bank.

Your data sources are slow. Those nine properties you are not counting are REO. I have data sources to cross reference them to confirm it. Please either post the addresses or PM them to me.

You need to go through 188. Don't be lazy. Copy and paste is your friend. I bet you would find 15-20 more REOs if you did. Sorry, if I cared about AV, I might do it myself, but I don't. Since you won't do it, and speaking from experience, you missing at least 15-20 by only going through a data set of 70. I really hope they didn't let you cut corners like this at SC.

 

[NewportSkipper_IHB]

Wasn't the 188 in a different place alltogether? The big picture is very clear: two months of inventory.

Let's say we believe the 9 are REO, 66-28=38 units.

The Redfin test is discredited.

 

[RobertLarsen_IHB]

4 were duplicates

5 Auctions (what do mean by this?)

- Courthouse foreclosure auction. These auctions are not listed in the MLS, and are not able to be viewed prior to winning the auction.

1 Pre-Foreclosure (what do you mean by this?)

- allows a defaulting borrower to sell the mortgaged property to satisfy the loan and avoid foreclosure. Shortsale is a preforclosure.

3 Not shown to be owned by the bank according to title (sometimes it takes a while for it to record, but it is most likely bank owned, can't exclude them from the data)

- Can't exclude them? You can't include them if there's no record, you can't include a property in the data if it's based on probability. Plus, even if it just hasn't been recorded yet, that means that it just became an REO and I wouldn't classify it as Shadow Inventory. I will also keep my eye out on those properties in the next 2 months.

28 listed on the MLS

Is there 188 REOs in 92656 or 70? I looked at the list of 188 and right of the bat I saw conflicting data. There are dozens of properties listed as bank owned but at the same time had "Joe somebody" as the owner. And when I looked it up on title, it showed that either "Joe Somebody" is not even in default or recently purchased the property from the bank.

Your data sources are slow. Those nine properties you are not counting are REO. I have data sources to cross reference them to confirm it. Please either post the addresses or PM them to me.

You need to go through 188. Don't be lazy. Copy and paste is your friend. I bet you would find 15-20 more REOs if you did. Sorry, if I cared about AV, I might do it myself, but I don't. Since you won't do it, and speaking from experience, you missing at least 15-20 by only going through a data set of 70. I really hope they didn't let you cut corners like this at SC.

I took the list awgee gave me... YOUR datasource, Forclosure Radar, was the one in fact that showed me that the owner was an individual and not a bank.

Update

I went through the first 10 of the 188 REOs you gave me and 9 out of the 10 said they had a individual as the owner. So I went to make sure it was accurate, and found that all 9 are labeled as Bank Owned Sales and they had all been purchased in the last 5 months.

[Image deleted due to privacy issues]

Moderator's note: Thank you for updating your graphic to remove the names.

 

[RobertLarsen_IHB]

I'm not saying there is no shadow inventory. I'm saying there is no bank conspiracy to hoard REOs, and prevent them from reaching the market. The shadow inventory that is out there is purely a result of inefficient banking. (i.e. the delay from the moment a bank takes a property to when it gets listed on the MLS, or sold).

Really? Did you also think banks didn't look the other way when it came to qualifying for exotic loans?

I'm a bit more skeptical. I think banks do whatever benefits them... maybe they don't have enough manpower to push them through... but I also don't think they aren't in any rush since us taxpayers are funding their "non"-effort.

EDIT: Double negatives.

Okay well lets say you're right, and that banks do whatever benefits them because certainly to some degree it is true. It's capitalism. But, do you think it is really benefiting the banks to hold inventory for that long and absorb the costs (HOAs, property tax, utilities in areas of extreme weather, deterioration, etc...). I just don't understand why banks would do that on one hand, and on the other hand bribe homeowners with up to $7K (possibly more, I've only seen $7k bribes so far) to vacate a property so that they can sell it. Also, any bank owned property listed on the MLS will take cash offers over any offer that requires a loan. To me it seems like they are trying to get rid of the properties as quick as possible.

 

[NewportSkipper_IHB]

This says it all:

1 was taken by the bank between 8/15/2009 and 8/30/2009

8 were taken by the bank between 8/1/2009 and 8/15/2009

9 were taken by the bank between 7/15/2009 and 7/31/2009

3 were taken by the bank between 7/1/2009 and 7/15/2009

6 were taken by the bank between 6/15/2009 and 6/30/2009

0 were taken by the bank between 6/1/2009 and 6/15/2009

2 were taken by the bank between 5/15/2009 and 5/30/2009

There is nothing left to argue. Only eight units older than July.

 

[irvine_home_owner_IHB]

I'm not saying there is no shadow inventory. I'm saying there is no bank conspiracy to hoard REOs, and prevent them from reaching the market. The shadow inventory that is out there is purely a result of inefficient banking. (i.e. the delay from the moment a bank takes a property to when it gets listed on the MLS, or sold).

Really? Did you also think banks didn't look the other way when it came to qualifying for exotic loans?

I'm a bit more skeptical. I think banks do whatever benefits them... maybe they don't have enough manpower to push them through... but I also don't think they aren't in any rush since us taxpayers are funding their "non"-effort.

EDIT: Double negatives.

Okay well lets say you're right, and that banks do whatever benefits them because certainly to some degree it is true. It's capitalism. But, do you think it is really benefiting the banks to hold inventory for that long and absorb the costs (HOAs, property tax, utilities in areas of extreme weather, deterioration, etc...). I just don't understand why banks would do that on one hand, and on the other hand bribe homeowners with up to $7K (possibly more, I've only seen $7k bribes so far) to vacate a property so that they can sell it. Also, any bank owned property listed on the MLS will take cash offers over any offer that requires a loan. To me it seems like they are trying to get rid of the properties as quick as possible.

I get what you are saying... but I think you missed some parts of the discussion in regards to capital ratios, mark to market etc etc etc. I don't really know that stuff but if I were a bank and moving REOs would put my liquidity at stake... I would think twice. And if the rumors of a recovery are true, wouldn't I just bleed out the bailout money before destroying a market that I need to bounce back to decrease my losses. I think the ones they are cashing keys on are the ones they know they can turn over with minimal losses, everything else... they are holding their breath on... at our expense.

I'm not smart enough to explain this stuff but you should really listen to those who are. It just doesn't make sense that all these properties are in some state of foreclosure but they aren't hitting the market. We can crunch numbers all day... but doesn't it seem weird to you?

Again... I'm just a nobody when it comes to RE but watching how fast prices rose without the income to support it, seeing how ineffective (and how few) loan mods are, knowing how many resets/recasts are out there, and experiencing people around me getting laid off... why aren't there more drops? More inventory? More REOs?

I know... it's the FCBs.