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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Comments

  • I understand the concern that flooding the market with REO listings can depress prices further. However, what is the alternative? Are banks planning on foreclosing but then leaving the homes vacant? That requires financial commitment by the banks to a certain level of upkeep -- at the very least insurance and taxes and maintaining the home in a safe condition. Or will they allow homeowners to stay without foreclosing, which I assume would mean that homeowners are living there for free, because why make the payments? That is financially draining to the banks as well. I don't see how publicly traded financial institutions can be acting in the best interests of their shareholders by taking actions that directly impact the firm's bottom line. Concerns over market prices in general are unlikely to trump specific large expenses that could be avoided by selling off the assets.

    On my point about agents leaving, Steve, I do know some good ones have gone. Fortunately, so have a lot of bad ones. There are always bad agents out there, and they'll never be all gone, but hopefully the majority of the ones leaving now will not be missed.
  • Jose, oh yes, never put all your eggs in the same basket, I agree 100%. I have a small team and we all specialize in different things including International Real Estate, but when we shake the tree, nothing falls out! I've been in squirrel mode for 2 years now (had a really good summer last year) but the ole stockpile has run empty.

    Megan, the biggest problem with agents leaving is it's the good ones. The bad ones seam to be growing in numbers! I've got one agent that has been trying to get one of my listing under contract since Christmas! I've lost count on how many times I've sent his offers back for corrections. Now we have an agreement with the bank and he still cannot get the paperwork correct so we can make it binding!

    And yes Shelly, I see the numbers in my area outside Atlanta. Thousands of homes somewhere in the foreclosure process, but none coming on the market. I've already been told of 100 to 130 properties coming my way, but the asset manager has no idea when the bank will release them. All we can do at this point is wait and ride it out the best we can.
  • Ok, If there is no glut of foreclosures where are these houses going. I have 100's of buyers and no properties to sell them. If you search realty trac or any of the county records these houses exist and are up for auction so what is happening where do I find them I am in Los Angeles. I have sent thousands of postcards went door to door and very few want to sell even if they have foreclosure looming. Any suggestions?
  • Steve, you make a good point about agents leaving the business. However, that can be good too. Like other aspects of the housing market, I feel that here in Northern California, the agents leaving the business is a form of "correction." I'm sure it's like this everywhere -- everyone has "a friend" in real estate. With the huge prices here, we saw everybody and their brother go out and get a real estate license. Lots of deals were made (and paychecks cashed) by agents who really had no idea what they were doing. When the going got tough, most of those agents left the business. When volume picks back up, I can only hope that those of us left are better able to put together clean transactions.

    Megan Zavieh
    Mission Valley Real Estate Company
    Fremont, California
  • Steve, don't put ally our eggs in one basket, like your say we don't know the future, buyers are coming out of snow and they are willing to buy, I am working with 2 first time buyers right now, and half of my listings both REO and short sales are under contract, and I have some more in the pipe. I love listing REO properties, but at the end of the day I have bills to pay, and I don't know the future, to be honest I am kind of concern of what is going to happen after April 30th. that is whay I am in a squirrel mood and trying to store food for the winter.
  • Lol, there was a report in the local news this week, we have almost a 15 to 20 year supply of building lots in the Atlanta metro area! And few builders can get construction loans to start back. I'm in an area with a very large supply of lots, we had a 10 year supply before the housing market crash.

    Pricing has not been affected yet except for when we get competing offers, otherwise buyers still want to cut your throat on each deal. Even with new construction REO's going for $100K off builder's pricing, people still think they can offer 30% below list price and get upset when we counter back. Now if I could add the word "Foreclosure" to our regular listings they would be gone. All people want to look at in my area are foreclosures, but they don't understand thay are dealing with banks and not a normal home seller.

    Yes, I agree with yall. Limited inventory will slowly bring up pricing. But at the rate agents are leaving the business right now due to no sales (which will be good for me if I can hang in there), there may not be anyone left to conduct the sale! And it's hard to pay your bills when you have run out of inventory and you do not know when more are coming.
  • I agree Jose, another wave of foreclosures hitting the market will set us back a couple of years possibly.

    Steve I do understand what your going through in your market, down here in SW Florida we are at a 5 month supply of inventory now verses a 28 month supply last year, properties were cherry picked and the quality went down with the supply, now when I get an REO they go under contract almost immediately.

    Hopefully because the lack of inventory in Atlanta your pricing will increase quickly and you can start selling those builders homes your waiting on, might even do well for your lots too. Record lows mean aggressive buyers, hopefully the banks will continue to give you properties as they realize your area trends.
  • Steve I think the reason is to control the market and the prices, lately a lot of publications are talking about the increase of sales, decrease of foreclosures, increase in home prices, etc. remember the good ole supply and demand, if the seller keep the inventory low and the buyers increase then the prices will increase, giving a sense or economic recovery and increasing the people's trust in the lending institutions, banks, and wall street. So maybe in the next two year prices will climb some more and when the bank release more inventory the prices will be higher.
  • On the flip side to this is that in the Atlanta area we are seeing record low inventory and could use the additional properties. The buyers are returning to the marketplace, but there is little quality inventory for them to look at in some areas.
  • This is good news for us all, It would hurt much more if the market was flooded with REO's. The economy revolves around housing more than people think, when the pricing gets into a more normal level and it makes sense for builders to build and folks to buy new is when will see a good start to recovery. Contractors, subcontractors, builders, pool compnaies and furniture makers have been sitting on the couch watching Oprah for too long now...time to get back to work.


    There will always be REO, the smart REO agents will continually seek to improve their market share. I personally feared the tsunami and didn't want to be sitting on 80 listings with no buyers as well as every other broker in the area. It is a very smart move on the banks part to proteck and preserve.
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