Shadow Inventory (Phoenix, Buckeye, Maricopa: rent, vacation home, buying)

[Captain Bill]

Originally Posted by MN-Born-n-Raised

Here is the reality. You WILL be able to buy a home for around list price or slightly higher in the Surprise area. Do realize that Surprise was the epicenter of foreclosures so the rest of the Valley may be more competitive bidding war. BUT (as I posted) prices are up (on average). So your $2K over bid with cash should snag a home. But you are not going to snag as good of a deal as you could have 6 months ago.

Re: Valley Shadow Inventory. Those who have not done their due diligence may assume there is a large "Shadow Inventory" in Phoenix. Those people might include Realtors, mortgage officers, etc. How can I be kind....... Well I won't. There are plenty of dopes who work off of gut feelings or who want to believe there is some sort of conspiracy theory. Google our former governor on MN (Jesse). He is an idiot yet people assume he is credible (9-11 controversy). So assuming Mike Orr's data is coming from the county (and I have no reason to doubt it) then there ain't no damn massive "shadow" inventory. If prices are holding tight or dropping as you claim they are, then push out your trip till June and stop attempting to wonder what peoples opinions are. Let's face it, no one is going to convince you. So just wait a couple months and see what happens.

.... Here is what Mike Orr had to say yesterday about prices:

Quote= Mike Orr courtesy of the Cromford Report --March 12 - "Appraisers please note. For properties priced under $350,000, to derive current market value you probably need to add between 3% and 5% to any comparable sales that closed prior to March 2012. The reason is this chart here (click on the thumbnail below)

The same applies to investors who base their offers and/or trustee sale bids on recent sales prices. We all probably need to get used to prices moving fast again after 3 years of comparative stability between April 2009 and February 2012."

I recently posted the NOTS interactive chart which showed that the notices are continuing to decrease, despite a slight increase early this year by BofA and a couple others.

When a NOTS is issued, it takes a minimum of 90 days for the home to be foreclosed on. However, as we all know, when a home gets a NOTS it may already be Active on the market, and accounted for. If it isn't, and is priced under $150k and priced at the market for it's condition, it's gone immediately, and will never reach the trustee sale. And, as we've seen in another chart, the majority of trustee sales are now going to 3rd parties instead of reverting to the banks.

Therefore, there is no indication at all, from the available data that there will be a shadow inventory issue in Phoenix in the near future.

Notice that Mike Orr mentioned prices up to $350k, not just $150k. This is the trickle up effect that I've mentioned.

[jdahunt]

I will be out in 3 weeks from today.....After discussions today with my realtor expect to find and have offer accepted before I leave town.

I don't have unrealistic expectations of coming in and low balling prices, if I find what I want and have to pay an extra 10-15% its no big deal.

If in 2-3 months or so the shadow inventory ends up being real and prices drop I'll come in and buy a few more.... :-)

[jimj]

Originally Posted by jdahunt

You are wrong on your assumptions of me about the shadow inventory. I do like having the discussion, but it seems like you are against that for whatever reason.

I have no idea as whether the shadow inventory is real or not, there is a lot of information on both sides.

The housing industry has been given billions and billions in bail out money, if you generate one penny from real estate then you are benefiting from it. How do you think the market would be if we were to shut down fannie and freddie as they should be IMO, they are being given billions in continued tax payer bailouts.

One interesting tidbit, in talking with my Phoenix Arizona Mortgage specialist today and discussing some of what you're posting....one of the first things she mentioned was to be wary of the soon to arrive shadow inventory. She believes its going to start showing up in the next couple of months.

She agrees that there are mulitiple offers on many houses but its primarily people that are low bidding. She said for my price range and where I'm wanting to buy that it won't be a problem, at most I may have to pay listed price or a couple of thousand higher but should definately leave town with an accepted offer if I find something I like.

If you're looking in any of the areas we've looked in very recently you're in for a shock. Since you referenced a "Mortgage Specialist" and not a RE agent it leads me to believe you're getting smoke blown up your leg from a wishful person.
You "may" have plenty of short sales to argue with the bank about for the next 6 months but REO and conventional sales?
I don't think so.

[Potential_Landlord]

Originally Posted by Captain Bill

.... Here is what Mike Orr had to say yesterday about prices:

Mike Orr courtesy of the Cromford Report --March 12 - "Appraisers please note. For properties priced under $350,000, to derive current market value you probably need to add between 3% and 5% to any comparable sales that closed prior to March 2012.


Notice that Mike Orr mentioned prices up to $350k, not just $150k. This is the trickle up effect that I've mentioned.

Will the banks accept this increase in price? Even if I go for a refi?
Thanks, PL

[jdahunt]

I'm not looking at any short sales......the mortgage specialist is for multiple property purchasing, I have realtor who is located in the Suprise area.

[Captain Bill]

Originally Posted by Potential_Landlord

Will the banks accept this increase in price? Even if I go for a refi?
Thanks, PL

An appraisal is an appraisal, no matter what it's for. However, Mike is only making a statement, sending a message as to where he sees the market going, and suggesting that appraisers take notice.

Will the appraisers inject a forward looking number? I don't know. At the present time we know they're being very conservative.

Picture a buyer who buys a short sale today with today's comps at $150k. If the short sale is approved 4 months from now at an appraised value of $9,000 higher and the lender wants that price; it could knock that buyer out of the mortgage s/he was approved for, and after waiting 4 months would lose the transaction.

It's going to be interesting to see what happens.

[CheyDee]

Originally Posted by Captain Bill

Will the appraisers inject a forward looking number? I don't know. At the present time we know they're being very conservative.

Picture a buyer who buys a short sale today with today's comps at $150k. If the short sale is approved 4 months from now at an appraised value of $9,000 higher and the lender wants that price; it could knock that buyer out of the mortgage s/he was approved for, and after waiting 4 months would lose the transaction.

I'm certainly no expert, but I would think if someone is trying to buy a house at the very top of what they're approved for, they're probably buying more than they can comfortably afford.

[MN-Born-n-Raised]

Originally Posted by jdahunt

I will be out in 3 weeks from today.....After discussions today with my realtor expect to find and have offer accepted before I leave town.

I don't have unrealistic expectations of coming in and low balling prices, if I find what I want and have to pay an extra 10-15% its no big deal.

If in 2-3 months or so the shadow inventory ends up being real and prices drop I'll come in and buy a few more.... :-)

I am all turned around. You said you wanted to buy a vacation home. Now you are talking about buying a "few more".

You didn't want to buy in FL because it was too expensive yet now you are talking like $600K (4 homes x $150K) is chump change.

You said people who bought in 2009 till now lost their shorts but the market basically went down around 10% from that point. But now you don't care so much if you overpay by $15K-$22k (that's 10-15% of $150K). It's "no big deal".

Something isn't adding up.

[jimj]

Originally Posted by MN-Born-n-Raised

I am all turned around. You said you wanted to buy a vacation home. Now you are talking about buying a "few more".

You didn't want to buy in FL because it was too expensive yet now you are talking like $600K (4 homes x $150K) is chump change.

You said people who bought in 2009 till now lost their shorts but the market basically went down around 10% from that point. But now you don't care so much if you overpay by $15K-$22k (that's 10-15% of $150K). It's "no big deal".

Something isn't adding up.

I was wondering when someone else would notice. I also find it interesting that someone is claiming that RE professionals are stating facts not supported and completely contrary to what's been said by any agent I've talked to over the last few months while looking for a house not to mention what's been stated right here on this forum.
We'd looked in the <$150 range as far west as Buckeye and even the real bad houses were being snapped up within a week and while we were out viewing (not open houses) at random times we'd run into other groups looking at the same properties.
Now either those groups were related to our agent and following us to make us think we had to "buy now" or there were a lot of people out there looking at the same thing we were.
I do have to say in all fairness, we believed the same thing that JDAHUNT did after looking at all the public RE sites and even after the first week looking at IDX. What we didn't know until we dug into it further was even IDX lagged from real time information. One example, it doesn't tell you that there are multiple offers on a house that's not AWC or pending "yet". We ran into a few that while not under contract had several people in line waiting to be picked. No way to know that without calling or submitting an offer and even if you call it can change minutes afterwards.
One bright spot (I think) for those that can move up into the >$200k area, there looks to be some real good deals still out there.

[pgc323]

Originally Posted by jdahunt

The shadow inventory is real, if you want proof just watch some of the auctions and see who is walking away with them....its the banks...and they are not putting them up for sale any time soon.

Why...because as soon as they do they then have to declare the loss to their bottom line and it will kill their bottom line causing their stock to tank making it harder to raise capital.

I look at this site almost daily...that banks are getting back 90-95% of the houses being auctioned.

https://www.lee.realforeclose.com/index.cfm

This is going on all over the country.....at some point these houses have to be put on the market....imo...I think the banks are waiting on a bailout...I don't see that happening.

Originally Posted by jdahunt

I'm not saying your numbers are false......until I get my feet on the ground and see for myself I will withold anything like that.

My cousin who's been buying property for 25 years in Phoenix is telling me the same thing you are...but interestingly enough his wife who is a registered agent is agreeing with me.......about the shadow inventory.

My two trips last year to Phoenix we were still looking in Florida, so I didn't really get out and look. It is so obvious in Florida just driving down the stree and see so many empty houses that aren't even on the market.

Is it the same way in Phoenix, I don't have a clue.....you guys can answer that...do you see a lot of empty houses?

Originally Posted by jdahunt

This thread is about a shadow inventory right....am I in the wrong thread?

Moderator cut: rude

As I previously posted, there are just as many pro shadow inventory people as there are anti shadow inventory people..... I am neither I just happen to like and see and hear what both sides are saying...I am still waiting to draw my own conclusion.

I do a lot of investing and usually I find when people try and discourage a good debate its because they are afraid of the facts...not saying its the case here but we are in the shadow inventory thread right?

So it looks like some of the people posting here have been able to change your line of thinking on the Phoenix shadow inventory.