Nevada’s shadow inventory to clear in 7 months?

This according to research economist, Selma Hepp, in a recent report published on NAR’s Economist’s Outlook blog.  In the report, State by State Estimate of Shadow Inventory, Hepp provides metrics for the level of shadow inventory, as well as the share of sales comprised of short sales or foreclosures, by state.  Hepp then calculates the number of months it would take to clear the shadow inventory for each state.

Nevada’s number?  According to the report, “…Nevada’s distressed sales averaged a considerable 70 percent share of the existing sales and at that rate the current shadow inventory would clear in 7 months.”

state by state estimate of shadow inventory

22 comments

  1. Sully

    Well, if one believes this theory then based on 2010 sales – 7 months of distressed sales at 70% equals 2180 houses to clear the shadow inventory in Reno/Sparks.

  2. Zen

    It’s nice to hear such good news from a clearly unbiased source. In other news today, the GOP predicted that Obama would loose his bid for a second term in the upcoming election. A Tea Party executive was heard to say that their research agrees with the GOP’s.

  3. Sully

    Yeah, I heard Nancy Pelosi and Harry Reid say Obama will win by a landslide.

  4. Raymond

    Oh Guy, please. You might as well put up some quotes by Lawrence Yun telling us all that there has never been a better time to buy because prices will likely increase 8-9% over the next 12 months, according to market analysis from the “economists” at the NAR.
    I hope you are not on the verge of turning this into just another realtor shuck and jive show.

  5. Norton

    Really? You mean the 18,000 MIA NODs that have been recorded but not cleared in the past 3 years will all be sold in the next 7 months? Really?
    And what part of those 167,000 empty houses you posted about will be sold in the next 7 months?
    (pssst, Guy. How stupid do you think we are?)

  6. MikeZ

    Hepp provides metrics for the level of shadow inventory, as well as the share of sales comprised of short sales or foreclosures, by state. Hepp then calculates the number of months it would take to clear the shadow inventory for each state.

    The article claims there are only 38,847 homes (see Figure 2) in NV’s shadow inventory!

  7. humble but solvent

    How to protect your ass(ets) from the coming financial crisis that will make ’08 look like a warm up? Buy a house with a payment that you can sustain ad infinitum and put everything else in gold.

    As for the house, you don’t want to have to depend on the financial condition of any landlord. Interest rates will skyrocket within 3-5 yrs. Lock in the low rates today and sit back and laugh as the world goes crazy.

    As for gold — It’s the only real money, and it cannot be manufactured out of thin air. It is dependent on no government for perception of its intrinsic value. If you don’t think it’s money, then ask the Mesopotamians, Egyptians, Greeks, Romans, and 1.3 Billion Chinese and 1.2 Billion Indians if they agree or disagree ….FWIW….

  8. Move to Reno

    The key item is “current inventory”. Assume all foreclosures in Nevada stopped today, the existing inventory would clear in about 7 or 8 months.

    However, everybody knows that foreclosures in Nevada are not going to stop today.

    An interesting “factoid” presented in the article was that foreclosures in Nevada are slowing down. “As suggested by the national numbers, the situation is mostly improving, at least in terms of delinquencies. In the last quarter of 2010, serious delinquencies, those 90+ days late, fell over the past year in all but four states, Washington, New Jersey, New York, and Vermont. The change in the total non-current loans is in fact down 38 percent nationally, with states such as Hawaii, California, Nevada, New Hampshire, Illinois and Massachusetts all seeing decreases over 40 percent over the last 12 months. Even the states which decreased the least saw drops in the 23 to 25 percent range.”

  9. Move to Reno

    Interesting article about Reno’s housing market.
    http://www.rgj.com/article/20100525/BIZ02/5230329/0/ENT02/For-homeowners-who-bought-peak-breaking-even-could-decade-away?odyssey=nav%7Chead

    “Several sources familiar with the local housing market estimate the trek back to peak pricing will take Northern Nevada up to nearly two decades, barring another boom.
    “Assuming you bought at the peak and your value has dropped 50 percent, it will take 18 years at 4 percent annual appreciation to regain your investment,” said Mike McGonagle, a partner with MAC Associates in Reno. “And that’s basically just using (the rate for) traditional growth.”

  10. Sully

    hmmm, I remember a few years ago when a 1450 sq ft house in San Jose was listed at 450K and people said that was ridiculous, no one will pay that much. A few years later a comp was listed at 750K and realtors were saying buy now or get priced out of the market forever. Now, its back around 450K and (you probably guessed already) buy now its hit rock bottom! 🙂

  11. E.Edward

    What is truly amazing is despite all the feds efforts to date.. Home prices are still falling/correcting?? At some point even a halfwit will have to ask themselves “How long can the fed hold rates @ 0” ZERO…… How long??

    When it comes right down to it, these artificial rates are the only thing and I mean the thing holding this great big POS above water, everything else is just temporary!
    You will notice none of these pronounced wizards want to compose this in there metric scenario because there richter scale hits the negative spot every time!

    By the way has anybody here actually skirted the rim of this town and seen the amount of vacant homes, undeveloped stagnant property, ready to go house pads, homes for sale, etc.etc.? Well I have and its mind boggling!

    Just about everybody I know has some form of mortgage dilimma.

    7 months? I would feel lucky if the inventory cleared in 7 years!

    …..just my little thoughts

  12. inclinejj

    This article reminds me of the old Baylands Raceways in Fremont Ad’s

    Sunday Sunday Sunday be there!!!!!!!!!!!!!!!!!!!!!

  13. Guy Johnson

    To clarify my take on the prediction, I’ve changed the title of the post to a question.

  14. Martin

    Guy, I understand that you are a realtor and are surounded by realtors all day long. I imagine you subscribe to all the usual publications for your field, including those by the NAR. So it is understandable that, being immersed, you can lose your take on what value has NAR has. Now I recognize that the NAR has substantial value to you and the other hundreds of thousands of six-percenters through its lobbying efforts and attempts to create demand for houses. But I think it might benefit you to understand that in the eyes of most reasonable, objective people, the NAR is regarded as nothing more than a shill organization for realtors. It has ZERO credibility, especially after it denied the existence of the housing bubble for years after a typical 5th grader could determine there was a housing bubble.
    The NAR, and all of its “economists” have ZERO credibility. NADA. ZIPPO. NONE.

  15. Reno Ignoramus

    This reminds me of when Diane used to post all those monthly charts and graphs from the “experts” at Chase Realty telling us that inventory was shrinking and prices were stabilizing. Every month Diane would post these charts, and every month prices declined. For 20 consecutive months (maybe more) Diane would post these charts, and for 20 consecutive months, prices went down. And so finally, she stopped posting the charts.
    If one is uncertain whether or not one needs a haircut, one would be advised not to ask a barber for his opinion.

  16. inclinejj

    LPS: Overall mortgage delinquencies declined slightly in February

    Posted: 26 Mar 2011 07:48 PM PDT

    Earlier:
    • Here is the Summary for Week ending March 25th.
    • Lawler: Census 2010 and Excess Vacant Housing Units

    LPS Applied Analytics recently released their February Mortgage Performance data. From LPS:

    •Delinquency rates resumed their decline after an increase in January and foreclosure inventories remain stable, slightly below historic highs.
    • Delinquencies continue to improve as new problem loan rates decline and cure rates increase.
    • Foreclosure start declines and foreclosure suspensions are reducing the upward pressure on inventories caused by foreclosure sale moratoria.
    • An enormous backlog of foreclosures still exists with overhang at every level:

    –There are three times the number of loans deteriorating greater than 90+ days delinquent as compared to foreclosure starts.
    –There are also three times the number foreclosure starts vs. foreclosure sales.
    –Foreclosure inventory levels are over 30 times monthly foreclosure sale volume.
    Click on graph for larger image in graph gallery.

    This graph provided by LPS Applied Analytics shows the percent delinquent, percent in foreclosure, and total non-current mortgages.

    The percent in the foreclosure process has been trending up because of the foreclosure moratoriums.

    According to LPS, 8.80% of mortgages are delinquent (down from 8.90% in January), and another 4.15% are in the foreclosure process (about the same as 4.16% in January) for a total of 12.96%. It breaks down as:

    • 2.49 million loans less than 90 days delinquent.
    • 2.16 million loans 90+ days delinquent.
    • 2.2 million loans in foreclosure process.

    For a total of 6.86 million loans delinquent or in foreclosure.

    The second graph shows the break down of serious deliquencies.

    The number of seriously delinquent loans has stopped decreasing – mostly because the number of seriously delinquent loans that have not made a payment in over a year continues to increase.

    Note: I’ve seen some people include these almost 7 million delinquent loans as “shadow inventory”. This is not correct because 1) some of these loans will cure, and 2) some of these homes are already listed for sale (so they are included in the visible inventory).

  17. GratefulD_420

    For some clarity of the current local situation….

    MLS has 320 SFR foreclosures listed in Washoe County. (*Mitch’s site search)

    There are 1,063 SFR foreclosures currently on the Assesor’s list. The median “deed” amount is $199k.

    This is even before we begin discussing the truly “shadow inventory” of delinquent mortgages with no hope of recovery….somewhere in the process between NOD, NOS and TD.

  18. Rory

    This thread is like a circle jerk of the permanently unhappy and pessimistic. Which is not to say it’s time for blind optimism but step away from the keyboard and realize Reno-Sparks housing is now cheaper than it was in 1997 when there were fewer schools, roads, amenities and a University that was just starting to make it name for itself as a research institution of some notoriety.

    Housing is now affordable for the employed, BUT THE SKY IS STILL FALLING!!

  19. GratefulD_420

    Nothing like a Rory!

    A Rory is a person who uses gesturing to gain advantage of of a quantifiable argument.

    I see a lot of data posted without a lot of opinion and then you try to end the argument with…. it’s better than it’s been,,,, to say it ain’t going to be worse?????

  20. Rory

    At the Stoner_420:

    Dude, stop pulling tubes and back away from the keyboard.

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