Thanks to the Nevada Day Holiday, the end of month update is early. NODs fell to 765 from 930 last month, to their lowest level of the year. NOSs plummeted to 469 from 659, their lowest level of the year (except for a blip in February). TDs rose slight to 319 from 300, well down from their peak of 409 in July.
The TD numbers don’t surprise me, given the shear volume of foreclosures in the pipeline. NODs quantities have taken some sharp ups and downs depending of what moratoriums and programs are in place, but seem to be heading down. The NOS curve has been the most consistent, and is definitely trending down.
Any thoughts? Is there a real "improvement" going on, or just more shadow inventory adding up?
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Click here for a full size version – you can double click on it and get the data set.
Martin
Besides the fact that there were only 29 days for recording this month, which no doubt held down the numbers a little bit, who can say if a trend is setting in? A trend by definition takes several months to determine. 4 or 5 consecutive months of declines will be meaningful I would think.
Carleton
With one more business day, TDs would have been around 800 for the month. That still works out to 9,600 a year. That is still pretty ugly.
I note that the number of TDs was a higher percentage of NODs. It has been the case for many months running that the number of TDs is about 33% of the number of NODs. It jumped up to about 40% this month. My speculation is that TDs will become a larger percentage of NODs, only because there are still about 6,000 houses in some stage of foreclosure right now, not counting the new NODS coming online.
This is just pure speculation on my part. Until we get a banker on this blog who will give insight into what is really going on with those 6,000 houses, all any of us can do is speculate.
tired of waiting
can’t wait to hear all the NEGATIVE opinions about the numbers..
come on! hurry up you doom and gloomers!!
Sully
Visualize this as a high rise building. The bottom floor representing the high end real estate market and the top floor the low end market, financed with sub prime loans.
An external event causes the top floor walls to collapse, creating an unbalanced load for the floor beneath it. Eventually, that floors walls start to buckle because of the undistributed weight and collapses.
Putting more strain the next floor down, until it collapse.
Adding additional supports to try and reinforce the bottom floors can only do so much, as the undistributed weight of the top floors is far greater than the rated load for the additional support. IMO we are at that point right now, whereas the additional support structures will start to snap and this cascade will continue until the first floor is flattened.
Not a pretty picture, but that’s my vision.
SkrapGuy
It would be really great to get the foreclosure data by price band. In other words, what percentage of NODs and TDs are for houses less than $100K? Between $100K and $200K? Between $200K and $300K? etc.
We all know that most of the REO activity, up to now, has been at the lower end of the market. Just a stroll through the MLS makes that clear. But it would be great to have foreclosure data by price band. Does anybody keep this kind of data? Guy? Mike?
Raymond
That’s an interesting visual, Sully. Looks to me that what you end up with is a mangled pile of wreckage at the end. Is that what you see happening?
DocMD
Three reasons:
1) $8000 tax credit
2) Interest rates made artifically low through via tax payer dollars
3) A bit of relief from stock market increase which has bought some more time for some.
Hope the trend continues but don’t cork the champagne too soon.
Doc
Sully
Raymond, if the current debris (foreclosures) isn’t cleaned up before the support structure fails – then yes.
If the banks get to work on cleaning up the current number of foreclosures, in other words lightening the load on the support system, then the “building” has a chance to remain intact.
That’s a big “if”, as the banks seem to prefer to foreclose and take a 50% loss, rather than try and work out some arrangements with the defaulter and accept a loss, but less then the 50%.
I’m sure there are pros and cons to the banks making any deals, but I think any doctor can tell you – the first step in healing a patient is to stop the bleeding first.
skeptical
That little roller coaster in the data was observed last year at nearly the same time. Is something seasonal going on?
Undeniably, the data seem to be improving lately, but agree with the comment that you need a few more months before you can call it a trend. Agree also that the homebuyer credit, moratoria, and loan mediation efforts are affecting the data. So, what happens once these measures are removed?
Price bands on the data could yield alot more dimension to these stats, like Skrappy says.
So, I guess I agree with most. You guys are so smart.
What remains scary? 21% of all loans in NV in some stage of default. 6,000 properties in shadow or REO inventory. Unemployment at 14%. Would love to see the beginning of some stabilization, but until these headwinds are addressed and reversed, it will be an uphill slog in the Reno RE market.
T.O.W, was that good enough for you??
skeptical
Redux.
NOD’s while trending lower in the last few months were still higher than any time in 2008.
Unless these NODs become shadow inventory, and never hit the market (yes, we have to consider such bizarre possibilities in this market, apparently), the supply they bring to market will have to be reckoned with.
Unlike the stock market, where “second derivative” recoveries were the rational for an historic 50% run this year, the real estate market will not benefit in the same way from such psychology. Institutions bought bucketloads of stock over the last 6 months because they thought the trend might change, and they latched onto the bandwagon. OBTW, that stockmarket run seems now to be losing steam, FWIW.
In the stock market psychology can have dramatic affect on short term performance. Real estate, in contrast, is much more practically subjected to boring old supply and demand. No one needs to worry about being too late to this market. Even when it does recover, it’ll be a long, slow slog — just like it should be and always used to be.
Those looking for a quick flip return of 20% plus once we’ve hit bottom in the Reno RE market might be better off spending their time analyzing Chinese stocks or commodities.
inclinejj
http://www.calculatedriskblog.com/2009/10/fannie-mae-delinquencies-increase.html
Fannie Mae reported today that the rate of serious delinquencies – at least 90 days behind – for conventional loans in its single-family guarantee business increased to 4.45% in August, up from 4.17% in July – and up from 1.57% in August 2008.
“Includes seriously delinquent conventional single-family loans as a percent of the total number of conventional single-family loans. These rates are based on conventional single-family mortgage loans and exclude reverse mortgages and non-Fannie Mae mortgage securities held in our portfolio.”