More news regarding the lack of inventory in the market

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The RGJ ran this piece this morning Region enters sellers’ market as homes for sale are dwindling.
The $300,000 and below market segment is the range experiencing the greatest shortage.

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13 Responses to More news regarding the lack of inventory in the market

  1. Marvin says:

    Mr. Kaiser is correct……this is a short seller’s market. Look at the MLS. About 90% of all pendings are a short sale.

  2. Clarke says:

    Yep. Has there ever been a time in history when 90% sellers had no equity in their house?
    Absolutely unbelievable.

  3. Guy Johnson says:

    Marvin,
    Not quite 90 percent, but an unprecedented 72 percent of current pending listings are short sales.
    The mix of current pendings break down as follows:

    • 72% short sales
    • 16% equity sales
    • 11% bank-owned (REOs)

    However, what’s just as, if not more, interesting is the mix of the currently available inventory:

    • 19% short sales
    • 72% equity sales
    • 9% bank-owned (REOs)
  4. Marvin says:

    Ok, thanks Guy. So only 16% of all sellers have any equity in their house. 84% of all pendings are distressed sales. And if we calculate in the pendings of the courthouse buyers like the NRES guys, who really are churning REOs, it is actually even higher than 84% are distressed.
    Still unbelievable.

  5. Matthew says:

    Who could have guess that halting foreclosures (but not halting defaults!) would have dropped the inventory of REO property and encouraged more short sales?

  6. Jim says:

    What do they mean by “if the NOD gets fixed by May?” How is that going to happen? If they are referring to amending AB 284 isn’t the timeline closer to October of 2013 + 6 months?

  7. REreno says:

    I think if you further break down available inventory by price band, you will find that virtually everything listed below $150K is REO, short, or NRES type transactions. Above $400K it is mostly “equity” sales that have slim to none chances of finding a buyer. And above $1M it is just fairy dust territory.

  8. BanteringBear says:

    “Above $400K it is mostly “equity” sales that have slim to none chances of finding a buyer. And above $1M it is just fairy dust territory.”

    I have a better name for those properties: Coffins. The owners will die in them. They are so hopelessly delusional and ignorant to the world around them that nothing can help them. And, the REALTORS listing the properties at those prices are no different.

  9. Matthew says:

    Jim, our legislature can enact law to take effect Oct 2013. So there’s no inherent reason why it would take 6 months beyond that unless the banks need ramp-up time.

    The NODs should be built up by then, but their flow to market might take a little time.

  10. bebopbaloba says:

    Guy,

    I believe your usually thoughtful and insightful commentary really missed the mark in how you characterized the currently available inventory as being mostly equity sales.

    Factually correct perhaps, but the bigger picture and the really interesting part of the story is what’s not happening — the legions of underwater folks are no longer required to put their houses on the market at the moment, so there have been no new distressed sales entering the pipeline for long enough now to result in the effect you are only partially portraying out of context, in my opinion.

    As you’ve been telling us, there is no inventory, and the single biggest reason is: AB284.

    To emphasize that the market has flipped from distressed sellers to mostly equity sales misses the point that the number of distressed properties lurking out there has not changed substantially; the only fundamental change that has occurred is that the folks in distressed properties have no longer have an immediate need to liquidate as before, and have been granted a reprieve for the time being.

    At the moment, there is hardly a market, as you can’t have a market without some reasonable level of inventory and transactions representative of the underlying housing stock.

    So the statistic that available inventory has shifted to mostly equity sales is a misnomer, as the only reason for the statistical shift is the stoppage of new distressed properties from entering the market. Those distressed properties are still out there, and in fact may have increased in number as folks on the fence as to whether to continue to pay their mortgages or not may have decided that AB284 was enough to make the decision for them. I have personally heard of more than several such instances, and I wonder just how many people have made such a decision.

    I do not believe that 72% of the market has equity in their homes, and to the extent there has been any improvement in the % of equity owners, it has come mostly through the foreclosures that were allowed to occur, with the new owners now having equity.

    The only way for this market to heal and restore to transactional health, especially given the regional economy’s overall prospects, is either through foreclosures or via out and out forgiveness by the lenders of principal due, neither of which look likely to occur quickly.

    Until then, the limited activity that exists will be concentrated on the low end, with buyers and agents suffering the most, and the few equity sellers out there just happy to get out partially unscathed, though equity sellers on the high end will have a very difficult time liquidating, should they desire to do so.

  11. Matthew says:

    On the topic of short sales, I’ve noticed an interesting pattern.
    Many short-sale listings have very few photos… some of them of obscure rooms or poor-quality shots of the house…
    I suspect that residents understand that banks cannot easily foreclose…. so they may go along with short-sale mediation but then effectively sabotage sales with terrible listings.

    Am I too much in tin-foil-hat territory here?
    Back when we were in the REO-heavy environment I noticed that some of the best properties had no photos (and you just had to drive by them to see them) and they sold quickly. On more than one occasion I saw REO properties list and immediately go pending/no-show in the middle of the night. Is it too much to think that people are deliberately obstructing sales to take full advantage of the legislated imbalance?

  12. Guy Johnson says:

    bebopbaloba, your point is well taken. Thank you for your comment.

  13. booch221 says:

    Is Now the Time to Buy Your First House?

    Yes, says RBC Global’s Eric Lascelles, who believes homes are more affordable than they’ve been in quite a while. No, says economic consultant A. Gary Shilling, who contends that home prices have 20% or more to drop before they hit bottom.

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