inventory (21)


While it may seem as if it is hard to determine what is happening in the downtown San Jose condo real estate market, there are some majors metrics that are quantifiable that can help you see where the market is going. These markers include:


  1.      Sales to list price ratio
  2.      Days on Market
  3.      Months of inventory
  4.      Number of active listings vs number of pending listings.


We can learn something from each of these metrics.


  1.      Sales to list price ratio: When the San Jose condo market is appreciating, the sales price will be higher than the list price. In Jan of 2017 the sales price of Downtown San Jose condos is 101% of the list price. This is obviously very healthy, but in Feb 2015 the sales price on average was 105% of the list price which was a much hotter market.
  2. San Jose Condo market
  3.      Days on market is a very good way to look at how the market is doing. The stronger the market the shorter the days on market. In Feb 2016 the average days on market was 15 and it increased to 28 in Jan 2017. Things are obviously slowing, but the San Jose condo market has not tanked.
  4. San Jose condo market
  5.      Months of inventory: Months of inventory tells you how long it would take to sell all the homes currently on the market at the current pace of sales. When months of inventory goes up it means the market is slowing, most of time.  The months of inventory in downtown San Jose has been less than 2 all through 2016 and into Jan 2017. It has gone up to 7 months in Feb., but there have only been 2 days so we can not count that yet.
  6. San Jose condo market
  7.      Number of active listings vs number of pending listings: this one is my favorite. You look at the number of active sales and compare to pending sales. When inventory is low and sales are brisk there will be more pending sales than active sales. When there are 4 or more times as many pending sales as listings it is a really hot market. When there are more active listings than pending sales it is a buyer’s market, or trending that way. There are currently 21 active listings and 32 pending  sales of downtown San Jose condos.


So how is the market of downtown San Jose condos?


Looking at all the metrics I would say it is good, but slower than in the first part of 2017.


If you have any questions about buying or selling a condo in downtown San Jose please feel free to call me.

Marcy Moyer

Keller Williams Realty

Specializing in Probate and Trust Sales


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At some point when i started getting REO's in 2006 i was told by Spring of 2009 it would be all over. Boy they were wrong in 2009 i sold 189 REO's but something was different then. REO's were being traded from one asset company to another and i was sent along the ride with the new companies selling an average of 150 a year till 2014. Now in 2015 the REO's are just drying up with no new asset manager on the block and nobody even making claims that we have a shadow inventory coming sometime soon. So is it finally over? 

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Low Inventory

Investors continue to snatch up properties: Investors still snap up properties, but they’ve changed their strategy, which also constrains inventories. Now they’re holding onto properties and turning them into rentals instead of rehabbing and flipping them for profit. The result: fewer homes on the market.

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List-to-sold ratios dove into negative territory in December. December List-to-sold ratios tend to be the lowest of the year anyway but this is the first time since starting this project in 2007 we have witnessed a monthly average in negative territory.

    Admittedly one month out of over sixty is but a blip on the radar screen. Even so it is a pretty big drop along a very long downward trend.  

Chart 1 shows the long downward trend over several years and the dive to negative territory very well. Chart 2 depicts the gradual downward shift from year to year that has been occurring since 2009.

        In years past, we typically see list to sold ratios begin an upward trend in January, leading to inventory build in spring however, the long-term trend is down so unless something drastic happens, expect inventory in the next month or two to either increase as it does seasonally but at a much lower pace or maybe, just maybe it will continue its downward slide.

    Upward pressure on sale prices has a pretty strong hold for the time being. Speaking of sale prices, I’ll have final results for 2012 complete in about a week.

See list to Sold Charts inventory charts and price trend charts:,ORTrends.html

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We typically expect MLS inventory in the 4th to quarter begin dropping but boy howdy, inventory levels really dropped this year! We are at the lowest level since starting this project in 2009 and on a long-term downward trajectory in all three segments of sale type.

To see a graphic illustration of this trend view the charts and tables:,ORTrends.html

Reminder: the charts and tables do not include bare land, multi-family homes, time shares or mobile homes without land.

Bank Owned (REO) inventory remains but a fraction of total inventory in Bend and Redmond. Total REO inventory is down approx. 85% below peak levels.

Future availability of this segment remains uncertain as government intervention and the developing reluctance of lenders/servicers to foreclose in the first place or release for sale their current inventory has slowed the flow of these properties to the market.

The continuing saga of the fate and actual size of this “shadow inventory” I believe will continue to be shrouded in uncertainty for quite some time. What we do know, is most homes for sale in this segment sell quickly.

Short sale inventory continues the long-term slide as well. Total Short Sale inventory is also down approx. 85% below peak levels.

The Mortgage Debt Relief Forgiveness Act expires in just a few weeks and may have slowed down this segment. Most “experts” believe the act will be extended and retroactive if extended after the deadline.

Of potentially equal importance I believe, in my face to face experience with most distressed home-owners they have no intention of short selling or even letting go of their homes in any way. What happens with the distressed homeowner segment whether it is short selling, foreclosure, loan re-modification or some other form of settlement will be pivotal to future market direction.   

“Non-Distressed”/“Traditional” Inventory is roughly half of what it was at peak levels since starting this project in 2009. The downward trend is less pronounced than short sales and REO but a significant downward trend nonetheless. An overwhelming percentage of this segment experiences long marketing times, expirations and terminations as most list prices continue to be misaligned with what current market conditions will bear.

Looking forward, we are right in the middle of the seasonal low inventory period and typically expect tighter supplies in the coming months. The list-to-sold ratios however, indicate future MLS inventory will fall below seasonal levels of the past 3 yrs.,ORTrends.html

We are also near the typical end of year jump in expirations which will put a big, typically short-term dent in inventory if this is a typical year. Whatever that is these days!

Final Thoughts

Our market has definitely strengthened. Some might argue it is an artificial development while others will argue it is a sign of recovery. What can be said for certain is we have experienced a long-term and significant trend of declining inventory accompanied by price firming and appreciation in many areas throughout Bend, Redmond and Central Oregon.

Supply is tight and appears this will be the case at least in the near-term.

Merry Christmas!!!!!!!!

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List to Sold Ratios Continue to Improve

Made some changes to the charts to make it easier to see trends as well as changes in variation; change is definitely apparent.

List to sold ratios continue their long-term decline. Down in 2012 from 2011; down the last 3 months as we near the fourth quarter a time when, since 2007 (except 2009) they drop even further.  2012 has already seen the lowest list to sold ratios since the beginning of this project in 2007. If the 4th quarter trend repeats expect even lower ratios and consequently lower inventory levels in the months to come in central Oregon.

Getting back on my variation soap box again, variation has drastically decreased as well, meaning our little Real Estate process here in Central Oregon is getting closer and closer to some semblance of predictability, at least for now anyway J

I completed the July Sales data but didn’t report it. If you have time, wander over to the website and check it out. July sales were pretty impressive.  I don’t usually get real excited about monthly reporting because they can be so see-saw; instead we have strong looking upward trend.

The table shows a strong 3rd quarter for appreciation so far in average, median and price/ sq ft price measures.

For a more comprehensive understanding of our market see additional charts and tables covering inventory, sale and list prices etc.:,ORTrends.html

Also now on:

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Where is all the REO inventory?


Like many of you active REO Brokers, I too have found my REO inventory has shrunk....dramatically. In the past 6 months, I have seen 2 of my 4 AMP's layoff almost all of their Asset Managers and send out notifications that they have had their inventory re-assigned to another AMP. I have spoken with AMP CEO's who tell me that inventory is down across the nation and the market is more competitive than it has ever been. All in all, the golden year of REO is over.

Now, this flies in the face of some vital statistics that should be driving REO and keeping us REO Brokers busy as little bees. Let's look at one particular vital statistic, unemployment. Per the Bureau of Labor Statistics, since February of 2009, the nation's unemployment has remained above 8%, peaking at 10% back in October of 2009. Keep in mind, this number doesn't account for the millions of people who drop out of the unemployed workforce but, would still need a full time job. It's speculated that this number, the "real" unemployment rate is 14 - 18%. With 4 years of high unemployment, and a saturated market, most areas see a DOM (Days on Market) of a 6 months or more. So, if just using unemployment numbers and a minimum 6 months DOM, we should still be seeing the same REO inventory as we did at a minimum back in 2009, considering we are still at a unemployment rate above 8% and a "real" unemployment rate of 14%....right? So, where are all the REOs?

Finally, to further this point, I will make one last observation. In the Monday Jun 11, 2012 issue of National Mortgage News, it was reported in the article written by Paul Muolo that Fannie .....Fannie Mae alone, has an estimated $20 BILLION....yes, you heard me correct, $20 BILLION, in mortgages that are in the arrears. So, where are all the REOs?

It was just 3 years ago or so, I would walk into a struggling homeowners home and he would tell me that he was past due 5 months and the bank is threatening foreclosure. We would talk about short selling and he would likely list. 2 years ago, I would walk into a struggling homeowners home and he would tell me that he was past due 8-10 months and the bank was threatening foreclosure. Most of the time we would talk about short selling and he would list. 1 year ago, I would walk into a struggling homeowners home and he would tell me that he was 15 months past due, doesn't have any job prospects, on unemployment and was reading online that he could save his home with some government program. We would do the paperwork for a loan modification and, he would get on his trial payment for 6 months. After the 2nd month, he would default off because he didn't have any money, the bank would foreclose and he would be there for another 6 months till eviction. Now, I can go into a struggling homeowners home and, he tells me he has been past due now for 36 months, worked on a loan modification, was told he doesn't qualify, and now the bank has set a foreclosure sale date in 3 weeks so, he wants to know if he puts his home up for short sale, how much time would that give him before he has to be out. My point is, banks aren't foreclosing within a reasonably time frame after default. My 2nd point is, it seems that government influence, these "save your home" programs have done nothing but create a atmosphere where banks either can't or won't move forward aggressively with foreclosure.

The larger picture here is, we have a lot of homeowners who need to be foreclosed on....yes, I said it. We have a lot of homeowners who are living in homes they no longer own yet, banks aren't evicting. Instead, we have a lot of homeowners who are being feed lies from our government that they can save their homes. It seems to me that these banks are then forced to cooperate, even at their own peril, because some politician wants to win at the ballot box by telling homeowners....."YES WE CAN".

Once the pipe dream has ended and reality sinks in, America the Beautiful is going to become more of America the Broker and the really sad part is that because we refuse to tackle this tragedy of Government gone wild, individual Americans are going to find themselves with nothing more than burdensome debt and a handful of I.O.U's that read, "should-a, could-a, would-a"

Make no mistake, the REO inventory is a really big way however, it's hidden...away from the sight of most people because politically, it's just not something you can run on and get re-elected if you expose it to the light of day.

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Low home loan ratesIncreased Mortgage Activity

Although the winter months have traditionally been a slow time in the real estate market, business has seen significant improvement across Wisconsin. While it may be premature to proclaim that the recession is ending, these signs do point to an improvement in the overall economy.

Starting Off 2012 with a Bang

Across the state the number of home purchases increased by 11 percent in January 2012 in comparison to the number of homes sold in January 2011. This is a continuation of the trend that began in October of 2011. Although the average home price is still down from the levels of 2006, the improved activity is a good sign.

Refinancing is Hot now

Along with improvements in home sales, refinancing has been quite popular lately. The record low interest rates have caused quite a few people to investigate refinancing their home. Recent reports show that as much as 80% of mortgage applications have been for refinancing.

Primary Key to Fuel Home Sales and Price Improvements

The majority of economists agree that it is too soon to determine if the surge in home sales will last. However, they all agree on one point. A steady, stable growth in the number of people able to return to full time work will drastically help the housing market.

Still a Buyer’s Market

The good news for buyers is the available inventory makes it possible for a buyer to review multiple homes and find the one that is best for their needs. The recent statistics show that the current inventory of homes for sale is quite large, but the numbers are moving down. Along with the incredibly low interest rate this marks a great time for new homebuyers to get in their first home as well as for current homeowners to consider selling for either a bigger property or a home in a better area.

Short Sales and Foreclosures add Properties to the Mix

While home prices have declined in recent years due to the struggling economy, some of the best deals can be found in the case of foreclosures and short sales. It is common for a short sale to be in a much better condition than a foreclosure. Most of these owners were living in the home right up until the time they sold the property and moved on. This means that a home that was part of a short sale has a good chance of being in move-in condition. For the do-it-yourself type of people, a foreclosure could be a way to get a home at a tremendous discount and have the option of adding paint, carpet, and fixtures to customize the home to their liking.

Original Post - Increased Mortgage Activity in Wisconsin

Read more… for the past few months, I have been hearing a lot
of people saying that their REO Inventory has been slashed or REO is really
slow....or...."a decrease in REO inventory" however, I would like to
suggest an alternative opinion.


First, let's talk about one of the earliest steps to
foreclosure, the NOD or Notice of Default. Now, I have looked everywhere and I
can't find a single source authority on just how many have been sent out
monthly since the start of 2011 as a nationwide statistic however, I did find some
interesting articles on many different websites that lead me to believe that
the NODs are on the rise. Granted, I searched like 20-30 different websites so,
I can't realistically quote each one however, the overall trend was most areas
have seen a steady or slight increase in the number of NODs each month. I did
see some articles where some areas have seen a decrease in NODs but, these were
really rare and seemed to be in areas where the average home price was well
over 250k.


My point above is, most of us haven't seen the numbers of
NODs drop significantly enough to see such a dramatic decrease in inventory.
Let's be honest with each can we have a decrease in NODs when we
haven't really seen a correlated decrease in the unemployment rate? Yeah, I
said it.....and yes, it's obvious. If you don't have jobs...or job growth then
how can you see a decrease or even a leveling out of NODs? You can't....well,
you shouldn't anyways.


Now, what I do see happening, more and more is that many
homeowners are staying in their homes much, much longer than ever before. I
remember a time when I would do a relocation assistance negotiations and the
homeowner had only missed like 7 payments. Now, it's more like a


The sad truth of the matter is, regardless of how long these
people stay in their homes, regardless of whatever new "refinance"
plan the government can come up with, these people can't maintain a monthly
payment because they are too buys trying to find the money to pay their cell
phone bill, their electric bill, their car payment, car insurance, gas, bread,
milk, new shoes for little Jimmy and Susie, etc...


In short, yes....your inventory maybe shrinking...hell, it
my have even dried up but, it's not because no one in your service area is in
default, it's likely because the servicers and investors in your area are under
some type of regulations or "understanding" that if they don't want
to loose their FDIC insurance or be audited by the FDIC, they better slow their
roll on foreclosure and keep people in their least until after the
election that is.

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Where is the REO Inventory

Well for those of you who don't know, REO stands for Real Estate Owned, or bank owned properties. As an REO Listing agent I have seen my inventory shrink during 2011, I used to receive several houses to list every month from different clients and now they are down to a handful and I have more houses waiting for foreclosures to be ratified in the courts and evictions than the ones I have actively listed.

It is easy to understand that it might work better this way, because it keeps the demand and supply balanced. My listings are moving quicker and selling to relative higher prices than they were last year. I believe that banks are controlling the inventory so the prices don't drop so much, etc. 


Also everybody knows the popular term from last year robosigning, some states have created more obstacles for banks to foreclose on properties and even evict tenants, etc. I know in Maryland the banks have to contact the homeowner and offer the opportunity to apply for modifications, etc. I know some banks hired third party companies to make sure that usually real estate agents visit the homes and deliver documents, call the bank and put the homeowner on the phone, etc.

Today I read a good article that explains in more details why banks are doing this inventory control, not just to avoid property values to drop so much, put to make their books stronger and to manipulate data to their advantage.

Here is a link to the article  

It is hard to understand how a borrower can stay at a house for several years without paying mortgage, and getting away with that. Also banks are trying to sell their portfolio to investors rather than retail. And another idea that keeps resurfacing is the rental options.

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Ohhhhh the Moratorium

Its been about 5 years since I started in this REO indurstry.  Progressively, the game has changed and things have become harder and harder to deal with on a small level.  I have 18 employees and 20 sales agents, so we get it all done here.  But now, during the same time every year, we have these 2-3 weeks of nothingness.  What I don't understand is why there is a moratorium?  Listen, I have a heart, and I understand people do fall onto bad times, but c'mon.  You took out a mortgage a few years ago, that you, your wife, your children, you parents, friends, etc all knew you couldn't afford.  But, it was the "american Dream" so you did it and never looked back, until you couldn't make a payment anymore!  IF you are a tenant of a foreclosed property, I truly feel for you, and I will do anything I can to help you out during these times.  I have tenants all the time who tell me they have been making their payments for 2 years and they cant understand how this happened.  You DESERVE CASH FOR KEYS.  


So now what, the banks out the 300k they gave you, your living in a house that you don't pay for, the bank is paying your taxes and utilities, and you cant even leave the house in good shape when you leave!  Show some pride and be amicable and get out when you stop paying!  There is no reason a bank should have to pay you a Cash for Keys of even a dollar!  You should just leave!  Lets think about this logically, I buy a car for 50,000.  I pay 5,000 up front and i'm left with a payment of about 1,000 a month.  If I stop paying for the car, does the car company come to my house and offer to give me THOUSANDS of dollars to give them the car back?  No, they hire a tow truck company, and come take the thing off my driveway!!


On top of all the ridiculousness of people living in houses that they cant afford, I am a born and bred New Yorker.  In this lovely state, we are referred to as an "Attorney State" and a "Landlord State".  So, on average, it takes about TWO YEARS, yes TWO YEARS, to get a foreclosure completed here.  So thats TWO YEARS of not making a payment to the bank, before they can even have the DEED for the property!!!  Then if I still don't want to leave, guess what?  I can usually stay another 1-3 years while the LANDLORD (The foreclosing bank) tried to EVICT me!!!  So in essence, I can live in a house, with NO EXPENSE, for 3-5 years!  Why on EARTH does it take this long?  And then, to top it all off, the banks are nice enough to stop "evicting" people during Thanksgiving, and this year between December 20th-January 3rd.  Now, although it seems like the "right thing to do", if the eviction of a homeowner happens to fall during that time, let them go live back home with their parents until they can afford to move out, OR use the past 3-5 years of mortgage, tax, utility payments that you have NOT made, and go rent a place you can ACTUALLY AFFORD!!!


I guess I would really just like to see the 7.5 million houses that are in the backlog (The gloomy shadow inventory) come to market.  Maybe we can actually stabalize the housing prices if we sell off the homes we need to in order for the market to correct itself.  :)



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There'll be no Tsaumi......

The long predicted tsaumi of forecloses is not forthcoming. This, is according to Rick Sharga, SVPof Realty Trac. According to Rick, the bank will release the 'shadow inventory' to the market over the next couple of years in a controlled fashion.**

Our own Carlos Silva predicted the same in an article last August. see link

This way only makes sense, because if the banks were to flood the market with all of their pent up inventory it would apply downward pressure on pricing. In turn, further exacerbating the depressed housing market and home prices.

The 'shadow inventory' exists but the 'tsaumi' apears to not be heading our way........

**From NFSTI conference on 2/25/10 sponsored by Dan Waterman

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so many concerns, conspiracy theories, questions on if the government is trying to lock up the nations economy by controlling the market..It is mind boggeling. This video does give a pretty unbiased take on one more factor in the totally murky world we seem to be navigating. Watch and absorb seems to be the method of gaining knowledge, hope this can add to your own database...
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Real Estate "Shadow" Inventory Sasquatch

By now thanks to recent articles in The Wall Street Journal, New York Times, Bloomberg, CNBC and other media, so called Shadow Inventory has come to the mainstream, but it is more elusive than Sasquatch. Real Estate Agents have been blogging about this for months. For those who may have missed it, Shadow Inventory is the defaulted loans that the lenders are allegedly not releasing for sale. According to Rick Sharga, VP of RealtyTrac “We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market” Lawrence Yun, NAR chief economist called it a business decision by the banks “ I believe many banks including Fannie and Freddie, who are holding onto some properties, are releasing foreclosed properties in a measured way so as not to flood the market which they perceive then perhaps could lead them to even more drastic price cuts .So they are releasing properties on a measured pace as a business decision to minimize losses”How big is this Shadow Inventory? Well that depends on what you’re counting, and who is doing the calculations. Some statistics include foreclosures that have been completed, plus NOD (Notice of Defaults), NTS (Notice of Trustee Sales), Strategic Defaults (borrowers that are capable, but not willing to continue to pay on negative equity properties), possible Builder Bankruptcy’s, Vacant lots, Zombie Subdivisions, Commercial Loans, Debt-Securitization Markets, Side-line Sellers, and future Option Arms set to re-set in 2010.The problem here is that no two experts are counting the same. Just as followers of Sasquatch, Bigfoot and Yeti fantastic creatures can’t agree on the details, neither can the forecasters of Shadow Inventory. A recent report from Amherst Securities Laurie Goodman, which took into consideration reports from Mortgage Banker’s Association, Trulia, Core Logic and RealtyTrac led to the report that 7 million properties are in this inventory, and this was not including half of the items listed above. further concludes that 7 million understates the problem because it does not include borrowers that are currently 30- 90 days late in paying, only those which already have received NOD. According to Ms. Goodman’s research, a borrower that misses 1 payment only has a 25% chance to recover, after 2 missed payments 5%, and after 3, only a 1% chance to recover.That is only 2 experts, and quite the disparity between 600,000 and an understated 7 million. Atlanta Federal Reserve real estate expert Analyst K.C. Conway, who is part of the central bank’s Rapid Response program to spread information about emerging problems to bank examiners focused on commercial real estate at a Sept 29, 2009 presentation “Banks will be slow to recognize the severity of the loss-just as they were in residential”In my opinion let’s take the monster out from under the bed, and really look at it. Lenders may have inventory of foreclosed homes that have not been released yet. It may be that the process is taking longer, and the REO departments cannot handle the volume, some may have title issues, some might be in a short sale process, or some may be occupied by tenants that just were granted a whole slew of rights through Protecting Tenants at Foreclosure Act in May 2009. Mistrust of Wall Street and Banks is leading some to a conspiracy theory. As someone who has been a Real Estate Broker for 18 years, and has lived through the Savings and Loan Meltdown, sold properties for the RTC and FDIC, I do not believe they are taking into consideration any of the positives in future-casting. Current foreclosed single family residential property inventory is down. Days on the market from list date to under contract is down. Multiple offers on foreclosed homes becoming the norm. What about sideline buyers pent up demand for these properties? Investment firms and private investors itching to buy bulk portfolios? Housing Affordability Index is at a 20 year high, which brings even more buyers into the market. It will take further stimulus, credit market liquidity, lower unemployment rates, and restored consumer confidence to beat the monster, but it can be done.
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Whats Next?

So…Where are we heading in this market? Countless moratoriums at the Federal and State level. Moratoriums from the banks themselves trying to work out loan mod’s. Local Judges refusing to evict homeowners., Local sheriff’s doing the same. Now we have programs like HAMP and Court decisions like National Bank v. Kesler. There is such an underpinning of resentment from the American people against not only the Banks but corporate America as well. Will this sentiment continue to stall the inevitable? I for one am of the opinion that the market must be allowed to run its course. Real estate is and always has been cyclical. Yes, this is one of the worst markets we have seen in decades but “this too shall pass”.There is a huge amount of shadow inventory the banks are holding. Release it. By all means, do loan mod’s for people who are able to, for people who were duped into loans they could not afford. Help those that we can but at the end of the day these loan mod’s are mere Band-Aids, just delaying the inevitable by a year or two. Put the homes that are foreclosed on the market. Foreclose on the homeowners that have no justifiable means to pay those notes and let the market work its way out. It will be ugly or uglier than it has already been…But we will see quicker return to normalcy. The Government would be better served by spending to create jobs so that MORE homeowners do not lose their homes.So, how do we repair it once it hits “Sea Level”?Keep interest rate levels low and keep the tax incentive for first time home buyers.Ease restrictions on investors purchasing multiple properties. (This is key to the rebuilding)Ease restrictions on homeowners who have had foreclosures and or BK’s to get back into the market.Create restrictions so Banks can no longer offer exotic loans (I hear new ARM programs are coming)There are many others but I would love to hear some other ideas.
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A nationwide rise in homeowners’ “negative equity” is convincing more people to walk out on their mortgages, even if they have favorable credit ratings and can afford to pay their loan, according to recent studies.Two reports – one by researchers at Northwestern University and two other colleges, the other by the national credit bureau Experian and the consulting firm Oliver Wyman – are offering a clearer picture of “strategic defaultees” than has been previously available.According to Experian and Wyman, numbers of strategic defaults are far greater than you might expect. Nearly 600,000 borrowers nationwide fell into this category in 2008, more than double the number in the previous year. That number also represents 18 percent of all serious delinquencies from last year.So what kind of people turn in the keys and walk out on their homes, even when they can pay the mortgage? It’s not who you think – not entirely, anyway.The Experian report looked at 24 million U.S. credit records and found that borrowers with the highest credit ratings are 50 percent likelier to strategically default than lower-rated homeowners. The defaultees often have no adverse credit history, going from a record of perfect payments to no mortgage payments at all.It’s not longtime homeowners; the Northwestern report said borrowers who bought more than five years ago were less likely to default. Surprisingly, though, “young people” don’t account for that many walkouts, either. “The young are more dependent on the loans market and thus face higher reputation costs from defaulting,” the report says.Above all, though, the studies agree that negative equity – being severely “underwater” in a mortgage – is the biggest factor in strategic defaults. “The homeowners who walk away know full well they are damaging their credit records, but are making a calculated decision that sticking it out over the long-term would be worse,” writes Boston Globe real estate reporter Scott Van Voorhis.Not all underwater borrowers are equal, however. The Northwestern study says homeowners never walk out if their negative equity totals less than 10 percent of the home’s value. Once that shortfall reaches 50 percent, though, a significant number of borrowers will default strategically.The Experian report agrees. Strategic defaults are much higher in boom-and-bust markets with jumbo loans, like California – where walkouts have risen 6800 percent since 2005 – and Florida, where they’re up 4500 percent. (By contrast, walkouts nationwide rose 9 times since 2005.)There is one upside in the statistics: According to the Northwestern report, moral sensibilities keep the walkout numbers lower than they might be otherwise. Eighty percent of borrowers “think it is morally wrong to do a strategic default,” and even “amoral people can choose not to default when it is in their narrow economic interests to do so because of the social costs this decision entails.”But as unemployment and foreclosure inventories continue to rise, it remains to be seen just how much of a deterrent the “social costs” of strategic default will remain.
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Another housing slump coming?

From MSN Money today. BofA and Wells Fargo have both been on the record stating that the "shadow inventory" does not exist. This is the third published report I have read that sates otherwise. As servicers continue to trickle product into the market there is a strong chance that this will prolong the housing slump for more than originally thought. The tsunami we have all heard about, while driving prices continually lower might rid the market of this distressed inventory faster and perhaps hasten a quicker recovery...Thoughts?Analysts say 7 million soon-to-be foreclosed properties have yet to hit the market.Posted by Elizabeth Strott on Thursday, September 24, 2009 8:59 AMAny optimists touting a housing recovery might want to pause and think about this: Amherst Securities Group analysts believe the market faces another major hurdle because about 7 million properties that are likely to be seized by lenders have yet to hit the market.The "huge shadow inventory" reflects mortgages already being foreclosed upon or now delinquent and likely to be and, assuming no other properties are on the market, it would take 1.35 years to sell this inventory based on the current pace of existing-home sales, analyst Laurie Goodman wrote in a note to clients.In 2005, there were 1.27 million properties in the same situation.There have been a number of recent economic reports hinting at a recovery for the housing market. In May and June, the S&P/Case-Shiller 20-city index of home prices rose, the first month-over-month increases in values since 2006. Prices for U.S. homes rose by 0.3% in July from June, the Federal Housing Finance Agency reported earlier this week."The favorable seasonals will disappear over the coming months, and the reality of a 7-million-unit housing overhang is likely to set in," the analysts said, according to Bloomberg News .Meanwhile, The Wall Street Journal reported on Wednesday that real-estate agents and analysts worry that when the shadow inventory is unleashed, it could cause a big bump in the road to recovery and add a new layer of difficulty for the housing market.Ivy Zelman, the chief executive of Zelman & Associates, a research firm based in Cleveland, believes 3 million to 4 million foreclosed homes will be put up for sale in the next few years. The question is whether the flow of these homes onto the market will resemble "a fire hose or a garden hose or a drip," she told the paper.
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Low-End Sales Rocket in California

Once again misinformation hitting the media! What this article doesn't say is that inventory in California has decreased primarily due to lack of new foreclosures coming on the market. Like most REO brokers in California I have watched my inventory shrink month after month as moratoriums from various institutions have worked themselves through fruition. In addition the banks have been holding back inventory trying to change the Mark to Market valuation system. A quick look at the mls will tell you there is just nothing to sell at this point. Watch the reported inventory numbers for August. It should be off the charts.Michael HowardXcel Reowww.xcelreo.comwww.xcelinvestments.comMay 29, 2009With almost a 50% increase in year-over-year sales, the inventory of unsold existing single-family homes for sale in California has been cut in half, from a 9.8 months' supply in April 2008 to 4.6 months' supply this April, the state's Realtors reported. However, while sales were up 49.2% to a seasonally adjusted rate of 540,360 — the eighth straight month above the 500,000 level — the median price of houses sold in the month declined by more than a third, largely because the majority of sales were at the low-end of the market. "Inventory levels for homes in the under $500,000 segment shrank to nearly three months in April, compared with almost 10 months a year ago, while unsold inventory in the more than $1 million segment rose to approximately 17 months, compared with roughly 10 months in April 2008," says California Association of Realtors President James Liptak. "The dramatic difference in inventory exemplifies how the low end of the market is attracting more first-time buyers and investors, creating a shortage of distressed properties for sale." The median price of existing homes sold in the month was $256,700, a 36.5 percent decrease from the revised $404,470 a year ago. But it was 1.4% greater than March's $253,040 median price. CAR's figures are based on data collected from more than 90 local Realtor associations statewide.
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Due to the lifting of the foreclosure moratorium at the end of March, the downward slide in housing is gaining speed. The moratorium was initiated in January to give Obama's anti-foreclosure program---which is a combination of mortgage modifications and refinancing---a chance to succeed. The goal of the plan was to keep up to 9 million struggling homeowners in their homes, but it's clear now that the program will fall well-short of its objective.In March, housing prices accelerated on the downside indicating bigger adjustments dead-ahead. Trend-lines are steeper now than ever before--nearly perpendicular. Housing prices are not falling, they're crashing and crashing hard. Now that the foreclosure moratorium has ended, Notices of Default (NOD) have spiked to an all-time high. These Notices will turn into foreclosures in 4 to 5 months time creating another cascade of foreclosures. Market analysts predict there will be 5 MILLION MORE FORECLOSURES BETWEEN NOW AND 2011. It's a disaster bigger than Katrina. Soaring unemployment and rising foreclosures ensure that hundreds of banks and financial institutions will be forced into bankruptcy. 40 percent of delinquent homeowners have already vacated their homes. There's nothing Obama can do to make them stay. Worse still, only 30 percent of foreclosures have been relisted for sale suggesting more hanky-panky at the banks. Where have the houses gone? Have they simply vanished?600,000 "DISAPPEARED HOMES?"For the rest of the story follow this link:
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Real Estate & REO Outlook for 2009

It's been a while since my last blog post - too long! It's not because I'm lazy, it's because of my crushing workload. My team has been expanding to keep up with it all, but even so, I find myself at least as busy as ever, and possibly even more so.I wanted to share with you all my view of where we are headed for the rest of the year. There's a lot of talk about bail-outs and hitting the bottom and market rebounds, and there's also a lot of talk about falling off the economic cliff, outright economic depression, etc. I want to chime in with my own $0.02 - and that's probably about all its worth, but this community is about sharing, so here goes.I do think that the bail-outs are going to help stabilize the credit markets. To be honest, I have not seen a lot of qualified buyers having problems with their loans. People who have good credit scores, good incomes, and good debt-to-income ratios have been getting loans this whole time. People with dicey credit and iffy income have had a much harder time of it - which actually makes sense. A lot of these people maybe should not be buying real estate - unfortunately, that's a big chunk of the adult population, and there's a lot of real estate that needs to get bought, so it's understandable that the powers that be would want to put the credit into their hands to buy these properties.As for Obama's Homeowner Rescue Plan - in my market (northern California), there are precious few people who are going to qualify for this plan. Even nationally, where many more people will be able to take advantage of it, many people simply won't - I believe this epidemic of rational default (or ruthless default as some would say) will continue un-abated. I do think that the Homeowner Rescue Plan will in fact save some homes - and in large part, probably only those of the "most worthy" - that is, the people who are least likely to be back in default shortly after rescue.I think it's a good thing that the government get actively involved in trying to put Humpty Dumpty back together again. I am sure they're bungling the job and that somehow, it could be done much better and cheaper - but I think a large part of the problem is lack of confidence in the system - and if the government shows confidence that it can take steps to fix the system, that will go a long way towards restoring stability and calm.Having said that, I'll say this: I think the bottom is a ways off yet. For my business, 2008 was an extremely busy year - and I expect that 2009 will be busier. I expect there will be more foreclosures in 2009 than there were in 2008, despite the government's valiant efforts. And that is as it should be. There are simply too many homes in the houses of people who cannot afford them. Much better in the long run to move these properties from weak ownership to strong ownership.I also foresee the foreclosures moving up the economic ladder - increasingly, more and more middle, upper-middle, and executive/luxury homes are going to be foreclosed on. You see, in a normal economic cycle, first you have a recession, then you have increasing mortgage delinquencies, defaults, and foreclosures, accompanied by a drop in real estate values.This time around, we had a drop in real estate values, brought on by a "credit crisis" (or, the end of ultra-lax lending practices), followed by an increase in delinquencies - and then, recession. In a normal cycle, we would just now be at the beginning of a surge in foreclosures, not nearing the end of of one. Think we've hit the bottom? Think again.You do see, hear, and read news stories about positive signs that we may be approaching a bottom. I'm pretty sure, though, that I've been hearing those stories for quite some time now, at least a year - and the bottom seems no closer today than it was a year ago. And let's not forget the shadow inventory - it's real, it's big, and it's out there, waiting. I am getting listings that have been secured and vacant for months, never listed, never assigned to an agent - they've been sitting, for months, just rotting and dropping in value with the market around them.In short, I expect it will be another banner year for those of us in the REO Brokerage business. I'd be curious to hear how 2009 is shaping up in your market.
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