This was in the Press Enterprise,
Real estate brokers who sell bank-owned houses reported an unexpected surge of homes to sell last month.
They are waiting to see if it is a glitch or instead a move by banks to reduce the backlog of pending foreclosures and replenish Inland Southern California's nearly barren real estate market.
"It appears that we are going to start seeing the inventory break loose. But maybe it is an illusion," said Lance Martin, broker-owner of Coldwell Banker Pioneer Realty in Moreno Valley.
Pete Nyiri, owner of Top Producers Realty in Corona, and another major broker of bank-repossessed houses, said the number of new listings he received from banks increased 40 percent last month and surprised him because he was instead expecting a decline in new properties due to various holiday foreclosure moratoriums.
However, the brokers emphasized that the increase in bank-owned properties they have received will not be nearly enough to restore the market for first-time buyers who have been fiercely competing with one another and with cash rich investors for a shrunken inventory of entry-level houses.
The largest foreclosure brokers in Inland Southern California said they believe the banks have been holding back foreclosures, despite growing mortgage delinquencies, because they have been under political pressure to qualify financially troubled homeowners for loan modifications. All of them predicted that homes which banks are unable to save from foreclosure will start coming on the market in the first quarter of this year.
Whether newly foreclosed properties will appear in a deluge or in a steady stream is unknown, although most experts now are anticipating the banks will try to retain control to prevent home prices from plummeting.
"Nobody knows for sure," said Steve McKee, a broker specializing in bank-owned properties at Coldwell Banker Armstrong Properties in Riverside. McKee said he expects a large increase in foreclosed houses. He said he has noticed that banks gearing up by shifting staff from loan modification departments to foreclosure processing.
Foreclosure brokers also anticipate that in 2010 many more foreclosure threatened houses will become available to prospective buyers as short sales, where lenders allow the owner to sell a home for less than the mortgage.
The Obama Administration has adopted new short sale guidelines for banks that will become effective in April and the foreclosure brokers said their bank clients have told them they are preparing to do more short sales.
"Some are ramping up their short sales mitigation departments," said Michael Novak-Smith of ReMax Results in Moreno Valley. Novak-Smith said he believes banks have figured out it is cheaper selling a house when it is occupied, even at a loss, rather than absorbing the expense of maintaining and selling a house they have repossessed.
4 comments:
I find it hard to believe there is any kind of flood coming to the market. Everything I've seen in my search area lately is priced too high, and inventory is still very low.
That being said, I've been following your blog for 2 years now and we finally closed on a home in 92506. The deciding factor was our new mortgage with everything is $200/month cheaper than our rent. Best schools in RUSD, neighborhood we really like, etc. Got a 4.99 interest rate, which I'm happy about.
For political reasons, I expect the flood to be delayed until the end of 2010, for political reasons. As long as the government will allow banks to "extend and pretend", the banks will delay the firesales. Since the government is responsible for deciding when a bank is insolvent, and currently willing and able to loan/give enough money to cover current losses, it can delay things a long time.
I think by 2011 things will have gone too far for a continued coverup, and the government will then be thinking in terms of getting it over so things will be improving by 2012. But I thought the same about 2009, and here we are.
If anyone is having trouble understanding the impending foreclosure/shadow inventory tsunami, here is some data to support the theory. Coupled with high unemployment and large state deficits, the picture doesn't seem very rosy.
Unlocking the Foreclosure Box – The Most Comprehensive Shadow Inventory Housing Analysis for Los Angeles County. Examining 269 Zip Codes and Finding 100,000 Shadow Properties while Public Views 19,000.
It's LA county, but it should be fairly representative of other areas in the state.
But here is more:
1.8 Million California Mortgages Underwater
So 2009 was the worst year for California housing if we consider people not paying their mortgage as a significant criteria.
The good Doctor just posted another article related to shadow inventory:
Fannie Mae and Freddie Mac Behind the big number of Canceled Foreclosure Auctions? $745 Billion Bailout to Erase Negative Equity for Every Underwater Homeowner. Fannie and Freddie Uncapped. Prelude to new Bailouts?
-MLS public view data is artificially low
- Many cancellations only mean that foreclosures have been delayed or put into HAMP which is showing a horrible success rate
- A large number of properties with non-payers don’t even have a notice of default but show up in 90+ days late internal bank data (this number in California is over 10 percent of all mortgages)
- In California 1 out of every 3 mortgages is underwater
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