Where's the Inventory...

[quote author="Cuatro" date=1245225902]Foreclosures don't necessarily = MLS listings. Here's a theory:



(1) The cream of the crop properties are scooped up on the courthouse steps by cash buyers...the ones that aren't become REO inventory.</blockquote>


This is false. About a 1/3rd of the homes at the auction are bought by cash buyers, and 99% of them end up on the market and the MLS in 30 days or less.



<blockquote>(2) Banks negotiate large blocks of REO inventory with investment groups who have capital because it allows them to chunk off their burden and it keeps the transfer of these homes from doing maximum damage to the value of the banks' assets...what does the most damage? Publicly Listed MLS sale comps.</blockquote>


I have heard that deals like this are finally starting to go through. However, it is not that big when the investors are doing this on a national scale, not just by state, and not just by county. What is being bought by these investors in OC is minimal, if any at all.



<blockquote>(3) Some homes end up offered to agents to sell. What do you want to bet these agents make a few phone calls to their known friends, family, and long term clients to try and double end the commission on a smoking deal before listing it on the MLS?</blockquote>


This is probably somewhat true. I know that if I were an agent with an REO that fit a clients profile, then I would be calling them in a heartbeat to look like a hero with a screaming deal. However, I believe this has a minimal impact and most will have to go on the MLS whether it comes up pending on day 1 or not. If you are a member of the MLS then I believe you have to do the transaction via the MLS.



<blockquote>(4) The leftovers hit the MLS.</blockquote>


Many have yet to hit the MLS. The banks are slow. They are either overwhelmed or they don't want to flood the market or both. If you do the math of how many foreclosures have happened and how many have been listed or sold, then you would know there is a giant backlog. I know of one in particular in Irvine that was foreclosed on in February and it is still not on the market or transferred title.



<blockquote>Maybe I'm just a conspiracy theorist...But the MLS REOs I've had a chance to view have been absolute dumps (admittedly, they were all in north OC). The last one I was taken to had been on listed on the MLS for 2 days. When I walked in the front door there were 47 business cards from RE Agents on the kitchen counter.



I'd love to think if I hold off for just another few months I can get the turnkey home of my dreams at a fraction. But I'm beginning to have my doubts.



-Devil's Advocate</blockquote>


RE is sticky, and in a few months things will only have changed a little. Expecting to find a deal in the next few months could happen, but if you are patient there are more deals in the works.
 
[quote author="graphrix" date=1245242984][quote author="Cuatro" date=1245225902]Foreclosures don't necessarily = MLS listings. Here's a theory:



(1) The cream of the crop properties are scooped up on the courthouse steps by cash buyers...the ones that aren't become REO inventory.</blockquote>


This is false. About a 1/3rd of the homes at the auction are bought by cash buyers, and 99% of them end up on the market and the MLS in 30 days or less.



<blockquote>(2) Banks negotiate large blocks of REO inventory with investment groups who have capital because it allows them to chunk off their burden and it keeps the transfer of these homes from doing maximum damage to the value of the banks' assets...what does the most damage? Publicly Listed MLS sale comps.</blockquote>


I have heard that deals like this are finally starting to go through. However, it is not that big when the investors are doing this on a national scale, not just by state, and not just by county. What is being bought by these investors in OC is minimal, if any at all.



<blockquote>(3) Some homes end up offered to agents to sell. What do you want to bet these agents make a few phone calls to their known friends, family, and long term clients to try and double end the commission on a smoking deal before listing it on the MLS?</blockquote>


This is probably somewhat true. I know that if I were an agent with an REO that fit a clients profile, then I would be calling them in a heartbeat to look like a hero with a screaming deal. However, I believe this has a minimal impact and most will have to go on the MLS whether it comes up pending on day 1 or not. If you are a member of the MLS then I believe you have to do the transaction via the MLS.



<blockquote>(4) The leftovers hit the MLS.</blockquote>


Many have yet to hit the MLS. The banks are slow. They are either overwhelmed or they don't want to flood the market or both. If you do the math of how many foreclosures have happened and how many have been listed or sold, then you would know there is a giant backlog. I know of one in particular in Irvine that was foreclosed on in February and it is still not on the market or transferred title.



<blockquote>Maybe I'm just a conspiracy theorist...But the MLS REOs I've had a chance to view have been absolute dumps (admittedly, they were all in north OC). The last one I was taken to had been on listed on the MLS for 2 days. When I walked in the front door there were 47 business cards from RE Agents on the kitchen counter.



I'd love to think if I hold off for just another few months I can get the turnkey home of my dreams at a fraction. But I'm beginning to have my doubts.



-Devil's Advocate</blockquote>


RE is sticky, and in a few months things will only have changed a little. Expecting to find a deal in the next few months could happen, but if you are patient there are more deals in the works.</blockquote>
1) I think the percentage of properties bought by cash buyers/investors is probably closer to 10-20%. 90-95% of those properties are then put back on the market (immediately or after some work on the property has been done) after that purchase.



2) The packaging of REOs happens a lot less than what people think. One of my former clients picked up a pool of over 100 REO homes from a large lender and the process was long and difficult. These properties were located throughout various states and cities. My client indicated that if not for the significant discount to market value, the transaction wouldn't be worth it due to all the due diligence involved and the time involved negotiating with the lender (his deal almost fell apart at various stages).



3) I wouldn't be surprised if this was true, but this represents the exception rather than the norm. Of course there will always be realtors that will play games when it comes to listing these homes on MLS. I'm betting that the agent has to show the bank that the property was in fact listed on MLS (even if it was for a day).



4) Many of you guys have no idea how overwhelmed these banks are with work today. I work on the commercial real estate side and can tell you that these banks bring in outside consultants for a reason...they just dont have the manpower to handle the workload involved in dealing with troubled loans (whether they be residential, commercial, or commercial real estate). When a loan goes bad it needs to be "touched" a lot more and most banks have underestimated the amount of manpower involved in working the loan out. There is a threshold of how many REOs a bank can process in any given time given their resources.
 
[quote author="usctrojanman29" date=1245250957]1) I think the percentage of properties bought by cash buyers/investors is probably closer to 10-20%. 90-95% of those properties are then put back on the market (immediately or after some work on the property has been done) after that purchase.</blockquote>


The percentage according to foreclosure radar is 20% if you include all liens. If you only include first liens (the liens that matter), then that percentage is exactly 30%. This is backed up by the data of the 12pm auction at the Santa Ana courthouse today, with it being 30%. Granted, it was a good day with nice properties in Irvine, Orange, and a few steals that Buddha picked up in Garden Grove, overall it was a typical day.



I also stand behind my stat of 99% entering the market after being purchased at the auction. While I have no source to cite, my own tracking has shown that all of them come back on the market, and there are only a rare few that never do. By my own tracking it is .02% that don't come on to the market.



However, the backlog at the auction is huge. Many are getting postponed for whatever reason possible. While there are 200 originally scheduled for day, the lenders are filled with hope and green shoots, only time will tell if they make it to the auction. At some point... they will be at the auction, and that is why I stress patience.
 
Hey, aren't we in the beginning if ANOTHER 90 day foreclosure moratorium? This will just delay things even longer. More free rent. Bastards. I say tear that band-aid off quick.
 
[quote author="It?s a dry heat..." date=1245275114]Hey, aren't we in the beginning if ANOTHER 90 day foreclosure moratorium? This will just delay things even longer. More free rent. Bastards. I say tear that band-aid off quick.</blockquote>


The new moratorium is insignificant. It can be bypassed if one has a mortgage modification program in place (not one that is actually valid for the particular property and situation, just they have to have one). The state has to certify the program, but the moratorium doesn't go into effect if the bank files a claim stating they have one, even while certification is still pending.
 
[quote author="graphrix" date=1245257963][quote author="usctrojanman29" date=1245250957]1) I think the percentage of properties bought by cash buyers/investors is probably closer to 10-20%. 90-95% of those properties are then put back on the market (immediately or after some work on the property has been done) after that purchase.</blockquote>


The percentage according to foreclosure radar is 20% if you include all liens. If you only include first liens (the liens that matter), then that percentage is exactly 30%. This is backed up by the data of the 12pm auction at the Santa Ana courthouse today, with it being 30%. Granted, it was a good day with nice properties in Irvine, Orange, and a few steals that Buddha picked up in Garden Grove, overall it was a typical day.



I also stand behind my stat of 99% entering the market after being purchased at the auction. While I have no source to cite, my own tracking has shown that all of them come back on the market, and there are only a rare few that never do. By my own tracking it is .02% that don't come on to the market.



However, the backlog at the auction is huge. Many are getting postponed for whatever reason possible. While there are 200 originally scheduled for day, the lenders are filled with hope and green shoots, only time will tell if they make it to the auction. At some point... they will be at the auction, and that is why I stress patience.</blockquote>


I could swear that I read somewhere that once the NTS is filed, the bank can legally delay the auction for up to one year but no longer. Does that ring a bell with you?
 
[quote author="awgee" date=1233380239][quote author="irvine_home_owner" date=1233369936]It's gonna' be like the falling DOW but in slo-mo.



Is it a sin to look forward to watching this happen?</blockquote>


More like a guilty pleasure.</blockquote>


This kind of sentiment is the one thing that really bothers me about this site.
 
[quote author="Joe33" date=1245282409][quote author="awgee" date=1233380239][quote author="irvine_home_owner" date=1233369936]It's gonna' be like the falling DOW but in slo-mo.



Is it a sin to look forward to watching this happen?</blockquote>


More like a guilty pleasure.</blockquote>


This kind of sentiment is the one thing that really bothers me about this site.</blockquote>


It's the <em>one</em> thing that keeps me coming back!
 
[quote author="IrvineCitizen" date=1245284566][quote author="Joe33" date=1245282409][quote author="awgee" date=1233380239][quote author="irvine_home_owner" date=1233369936]It's gonna' be like the falling DOW but in slo-mo.



Is it a sin to look forward to watching this happen?</blockquote>


More like a guilty pleasure.</blockquote>


This kind of sentiment is the one thing that really bothers me about this site.</blockquote>


It's the <em>one</em> thing that keeps me coming back!</blockquote>


lol. good response.
 
Can I ask why it bothers you?



It's not like the posters here want to see people lose their homes (well... not the people who were "innocent"). They just want pricing to go back to fundamentals so that everyone can afford what they actually can afford and should be able to live with.



It's not right that in Irvine, a family that earns XXX dollars can only afford a 1-bedroom condo.
 
[quote author="irvine_home_owner" date=1245289260]Can I ask why it bothers you?



It's not like the posters here want to see people lose their homes (well... not the people who were "innocent"). They just want pricing to go back to fundamentals so that everyone can afford what they actually can afford and should be able to live with.



It's not right that in Irvine, a family that earns XXX dollars can only afford a 1-bedroom condo.</blockquote>


What do you mean "not right"? How does an economic climate turn into a moral issue? I just think its funny how bitter some are on this forum. I've been a mini-bear for a while, but I feel at this point a lot of the bearish sentiments are PURELY driven by the greed of posters here.
 
[quote author="26w100k+" date=1245291944][quote author="irvine_home_owner" date=1245289260]Can I ask why it bothers you?



It's not like the posters here want to see people lose their homes (well... not the people who were "innocent"). They just want pricing to go back to fundamentals so that everyone can afford what they actually can afford and should be able to live with.



It's not right that in Irvine, a family that earns XXX dollars can only afford a 1-bedroom condo.</blockquote>


What do you mean "not right"? How does an economic climate turn into a moral issue? I just think its funny how bitter some are on this forum. I've been a mini-bear for a while, but I feel at this point a lot of the bearish sentiments are PURELY driven by the greed of posters here.</blockquote>


Maybe "not right" isn't the correct characterization. I think it just doesn't make sense from an economic perspective. A stable housing market where home prices are in line with incomes is beneficial for all. Unfortunately, home prices got so out of whack that the correction to get back to fundamental levels is quite painful. But it's a necessary correction.
 
[quote author="irvine_home_owner" date=1245289260]Can I ask why it bothers you?



It's not like the posters here want to see people lose their homes (well... not the people who were "innocent"). They just want pricing to go back to fundamentals so that everyone can afford what they actually can afford and should be able to live with.



It's not right that in Irvine, a family that earns XXX dollars can only afford a 1-bedroom condo.</blockquote>


A couple of things....while everybody who cheers the market down will say they feel bad for innocent people swept up in it, you can tell from the tone of the post and the words said that it is not the case. There seems to be a sense of joy in watching the pain of others. I don' think a lot of people admit this but it is out there. It seems like it is a pretty common human emotion. And I am not singling out your or your post at all IHO.



Another thing is that a lot of people here complain about the sense of entitlement that a lot of the big Heloc spenders and bubble buyers had. But the sense of entitlement coming from the 'i am going to wait until i can afford a 3,000 sf house in one of the best markets in SoCal on a median income' crowd are showing an even greater sense of entitlement.
 
[quote author="26w100k+" date=1245291944][quote author="irvine_home_owner" date=1245289260]Can I ask why it bothers you?



It's not like the posters here want to see people lose their homes (well... not the people who were "innocent"). They just want pricing to go back to fundamentals so that everyone can afford what they actually can afford and should be able to live with.



It's not right that in Irvine, a family that earns XXX dollars can only afford a 1-bedroom condo.</blockquote>


What do you mean "not right"? How does an economic climate turn into a moral issue? I just think its funny how bitter some are on this forum. I've been a mini-bear for a while, but I feel at this point a lot of the bearish sentiments are PURELY driven by the greed of posters here.</blockquote>
Roscoe better explains what I was saying.



Economically... it's "not right" that you can earn the median income but not afford the median house. Or in some cases, the median priced house does not fit the lifestyle of those that can afford it.



Maybe I don't read the main blog enough but here in this forum... I don't see many hater-bears who are looking for the foreclosure/mortgage-adjustment wave to kill this bubble and a bunch of lives along with it. I just see people who have saved money and want prices to get to a point where they can afford it. Sure, there will be some carnage and most of us here would not wish this upon most reasonable homeowners (remember I am a victim here too... I lost quite a bit of money on my last house)... but in the end people are looking forward to seeing lower prices... not hearing stories of people losing their homes.



This is akin to saying that we like watching people get layed off... which I doubt is the case.
 
[quote author="Joe33" date=1245293423][quote author="irvine_home_owner" date=1245289260]Can I ask why it bothers you?



It's not like the posters here want to see people lose their homes (well... not the people who were "innocent"). They just want pricing to go back to fundamentals so that everyone can afford what they actually can afford and should be able to live with.



It's not right that in Irvine, a family that earns XXX dollars can only afford a 1-bedroom condo.</blockquote>


A couple of things....while everybody who cheers the market down will say they feel bad for innocent people swept up in it, you can tell from the tone of the post and the words said that it is not the case. There seems to be a sense of joy in watching the pain of others. I don' think a lot of people admit this but it is out there. It seems like it is a pretty common human emotion. And I am not singling out your or your post at all IHO.



Another thing is that a lot of people here complain about the sense of entitlement that a lot of the big Heloc spenders and bubble buyers had. But the sense of entitlement coming from the 'i am going to wait until i can afford a 3,000 sf house in one of the best markets in SoCal on a median income' crowd are showing an even greater sense of entitlement.</blockquote>


Irvine is second tier market at most. The "Best" markets are coastal regions (Newport, Manhattan, La Jolla, Malibu) or established high end neighborhoods (Bel Air, Pasadena, Rancho Santa Fe). Don't kid yourself, or anyone else for that matter, that Irvine is anything more than a well-planned inland suburb built out by most nondescript homes on smallish flatland lots, stuck in the middle of two of the busiest freeways in God's creation.



Best Market?!? Think again.



Unfortunately, it is apparently all any of us on this board can afford.
 
[quote author="26w100k+" date=1245291944][quote author="irvine_home_owner" date=1245289260]Can I ask why it bothers you?



It's not like the posters here want to see people lose their homes (well... not the people who were "innocent"). They just want pricing to go back to fundamentals so that everyone can afford what they actually can afford and should be able to live with.



It's not right that in Irvine, a family that earns XXX dollars can only afford a 1-bedroom condo.</blockquote>


What do you mean "not right"? How does an economic climate turn into a moral issue? I just think its funny how bitter some are on this forum. I've been a mini-bear for a while, but I feel at this point a lot of the bearish sentiments are PURELY driven by the greed of posters here.</blockquote>


I think it's more bitterness than greed. Bitterness because they make a good income and still can't afford a house. Also because renting is generally looked down upon once you reach a certain age, so it can make a person feel the need to defend that choice.



That said, I think there also is a little schadenfreude at seeing greedy ding-dong investors who bought at the peak lose $$ on their homes.
 
[quote author="traceimage" date=1245308951][quote author="26w100k+" date=1245291944][quote author="irvine_home_owner" date=1245289260]Can I ask why it bothers you?



It's not like the posters here want to see people lose their homes (well... not the people who were "innocent"). They just want pricing to go back to fundamentals so that everyone can afford what they actually can afford and should be able to live with.



It's not right that in Irvine, a family that earns XXX dollars can only afford a 1-bedroom condo.</blockquote>


What do you mean "not right"? How does an economic climate turn into a moral issue? I just think its funny how bitter some are on this forum. I've been a mini-bear for a while, but I feel at this point a lot of the bearish sentiments are PURELY driven by the greed of posters here.</blockquote>


I think it's more bitterness than greed. Bitterness because they make a good income and still can't afford a house. Also because renting is generally looked down upon once you reach a certain age, so it can make a person feel the need to defend that choice.

</blockquote>


Every time you say "bitter renter", a realtor is laughing somewhere, and a small kitten is killed. Please think of the kittens.



I don't think that it's greed, maybe a little bitterness. But the overwhelming feeling for me at least is FRUSTRATION. Basically what you have is people who are financially rational and responsible and people who are irrational and/or irresponsible. If you are financially responsible and saw the housing bubble for what it was, it didn't matter that you made all the right decisions. You were still prevented from buying a house at a reasonable price by the irresponsible group (with the help of the irresponsible government). The responsible are being penalized for being responsible. You do everything right, but other people's bad decisions still hurt you. That's quite frustrating.



That said, I do get the feeling sometimes that some posters here really enjoy the feeling of being right a little too much and like to rub it in. Personally, I don't care if anyone knows that I am right, I just care about making the best decision for myself.
 
[quote author="hedgehog" date=1245319070][quote author="traceimage" date=1245308951][quote author="26w100k+" date=1245291944][quote author="irvine_home_owner" date=1245289260]Can I ask why it bothers you?



It's not like the posters here want to see people lose their homes (well... not the people who were "innocent"). They just want pricing to go back to fundamentals so that everyone can afford what they actually can afford and should be able to live with.



It's not right that in Irvine, a family that earns XXX dollars can only afford a 1-bedroom condo.</blockquote>


What do you mean "not right"? How does an economic climate turn into a moral issue? I just think its funny how bitter some are on this forum. I've been a mini-bear for a while, but I feel at this point a lot of the bearish sentiments are PURELY driven by the greed of posters here.</blockquote>


I think it's more bitterness than greed. Bitterness because they make a good income and still can't afford a house. Also because renting is generally looked down upon once you reach a certain age, so it can make a person feel the need to defend that choice.

</blockquote>


Every time you say "bitter renter", a realtor is laughing somewhere, and a small kitten is killed. Please think of the kittens.



I don't think that it's greed, maybe a little bitterness. But the overwhelming feeling for me at least is FRUSTRATION. Basically what you have is people who are financially rational and responsible and people who are irrational and/or irresponsible. If you are financially responsible and saw the housing bubble for what it was, it didn't matter that you made all the right decisions. You were still prevented from buying a house at a reasonable price by the irresponsible group (with the help of the irresponsible government). The responsible are being penalized for being responsible. You do everything right, but other people's bad decisions still hurt you. That's quite frustrating.



That said, I do get the feeling sometimes that some posters here really enjoy the feeling of being right a little too much and like to rub it in. Personally, I don't care if anyone knows that I am right, I just care about making the best decision for myself.</blockquote>
I can't speak for anyone else on here, but I only speak what I believe based upon what I see, hear, read, and can calculate. I just can't see how prices will hold up where they are in Irvine....they will drop. How much and when...that I do not know. I'm sure there are some on here that do take pleasure at seeing prices falling further so it can teach the irresponsible a little life lesson. I don't take joy in other people's misery. Besides, I own 3 rental properties and have seen my equity all but disappear but at least I'm cash flow positive on each property and am in for the long term.
 
[quote author="usctrojanman29" date=1245319389] I don't take joy in other people's misery. </blockquote>


Me either but inflicting it sure is a lot of fun.
 
[quote author="Joe33" date=1245293423]But the sense of entitlement coming from the 'i am going to wait until i can afford a 3,000 sf house in one of the best markets in SoCal on a median income' crowd are showing an even greater sense of entitlement.</blockquote>


There is a stigma (overt or otherwise) if you're a certain age and don't own a home. Personally, I could give a spit about it, but some people really care.



And some of us are just trying to not overpay to own compared to what they can rent. For example, prices in my Orange neighborhood just about have reached a point where it only costs 20% more to own than rent. Three years ago, it cost roughly 3 times the price to own as it did rent. The nice folks next door fell into the trap I mentioned above, and they will likely not own again for a decade because they are stuck $400K in negative equity in a home that sold for $700K at the peak and probably shouldn't of ever been over $210K had the no doc interest only option ARM not been invented.



Is wanting to maximize your housing dollars so bad?
 
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