Shadow Inventory (Phoenix: price, market, declining)

[plusmiles]

[quote=jdahunt;23402436]

Originally Posted by whodiman

You are so right on, his apartment at ISU is $1,600/month so he could easily afford a house payment in Phoenix.
I have heard that other students were doing this as well, is this happening around Phoenix?

My son is currently a full-time student at ASU and sharing a rental with some friends. As you will soon see, the problem here is that there are no homes for sale in the Tempe area near the school, at what you would think would be depressed prices.

And jdahunt, here's my personal experience for you to dwell on prior to your upcoming visit.
There is no shadow inventory here and bidding wars are happening all over again. I've been out-bid 4 times since October; currently my home search is resulting in a new listing about every 3 days...one new listing of the type of home, in my area (east valley) and price range ($125k-$180k). I've been studying and watching the market in this area for the past two years. I can speak from personal experience that I, as well as the realtors I've been dealing with are having trouble finding homes for their clients in the entire Phoenix area. Of all of the many listings that I was watching over the past 24 months, have all sold within 30 days of listing. Two of those I bid on were sold almost immediately. In one case, the same day of the listing, my realtor and I were viewing the property, a truck rolled up and the driver hopped out and told us he just bought it, his realtor rolled into the driveway right behind him. On another, I tried to place a bid the second day of the listing to be informed that a cash offer much higher than list had been accepted late the previous night.
My most recent bid has been accepted on a home a bit further away than I wanted. I just received the appraisal which came in lower than the list price and lower than my bid over list, so now it’s back at the bank to determine if they will lower the price to match the appraisal or counter my offer.
Current comps, all within a mile show FMV to be $77/sqft, According to yesterday's Comford Report, the homes in this area and in this price range are selling for $66/sqft. So the appraised value shows, and I am willing to pay $10/sqft over market according to Comford, but they (the bank) have yet to respond.
FYI, there were multiple offers on this home, I had the highest bid for once, and the listing had just been updated to reflect an 8% price reduction, so my bid was actually over the original list price to win. Patiently I wait, the shell game goes on. Bring on the shadow inventory, buyers are waiting.
OBTW, my neighbor is going through the exact same waiting/shell game, her realtor can't find a property of the type/price range she's wanting to buy either. Here's more cannon fodder from the Mesa area: the home up the street from me just sold at FMV in less than 30 days, the new listing across the street has multiple offers pending immediately. There are no others for sale in my neighborhood. Homes that linger on the market that I have visited are not selling for a reason, they're junk, I've been there and I've seen why. Again, good luck, bring cash and you should be fine.

[bgray9]

Given the declining number of homes on the market in the Phoenix area, you'd certainly think the banks would be motivated to put more homes out there for sale sometime soon, if they really have a significant shadow inventory. If they don't do so, that'd seem to indicate that the significant shadow inventory isn't really there.

[jdahunt]

Originally Posted by Skywayy2001

Why is this going to be answered in the next couple of months as opposed to the last 3 years where no shadow inventory ever made it into the market here despite speculation? Your arguments make little sense and seem to be based in reality.....in Florida.

Well you just had a huge settlement between the big banks and the states and federal government. This had put a big hold on the numbers of houses going to auction....go back and look at the numbers going to auction when the brakes were put on and then at how long of time passed before the settlement.

So now with the settlement you could see a rise in foreclosures and auctions....how many and to what depth is anyones guess. Thousands or even the 6 million some are saying.....who knows except for the banks.

It could make a little difference with Arizona not being a judicial foreclosure state but the facts are the banks put on the brakes across the country, not just in judicial states.

There are loans that passed through 6 or 7 buyers before getting to the last guy and a lot of paper was lost or unaccounted for in between. This had nothing to do with whether you lived in a judicial foreclosure state or not so banks quit processing them.

There are people that haven't made a payment in over 2 years and no action has been made against them.....how much longer is that going to go on?

[Kimballette]

Once again, this thread in this forum is for discussion of the shadow inventory in Phoenix, Arizona. The national situation, as well as that in other states, are for the Real Estate forum, not here.

[jdahunt]

Yes the big banks put a hold on on a lot of foreclosure processing in Arizona, so with the settlement of which Arizona got the 3rd most money.....there should be new foreclosures or as some say "the shadow inventory" hitting.

If there are any significant numbers you should be seeing them in the next few months, this is just a guess.

[MN-Born-n-Raised]

Originally Posted by jdahunt

A lot of people that bought in 2009 lost a lot of value in 2010 and 2011, it is easy to see what the properties sold for and what they are going for today....in some cases its another 100k+ on a 2009 sell of 300k, I think your 10% number is a bit off.

My posts are pretty easy to read, no assumptions needed.

All along, we have been talking about homes in the West Valley (Specifically Surprise) for under $150K. So yes, assumptions are needed unless you want to cherry pick data to prove your point. Since April of 2009, my 10% Surprise AZ depreciation number might have been too large (lowest 2009 to lowest 2011 or highest 2009 to the highest cost per sq foot of 2011). It's been going up and down with a small downward slide. No one was losing $100K+ over the past couple of years in Surprise.

[TiredOfyycCold]

Originally Posted by jdahunt

I do agree with Captain that there is a shadow inventory and have always been one. What the discussions are about are if they are as big as some are saying as in the 6 million home range.

Jdahunt - you may benefit from READING what others post.
I don't recall Captain Bill ever saying that a shadow inventory exists, quite the opposite actually (at least in terms of the greater Phoenix area which is the basis of this forum).

[Captain Bill]

Originally Posted by TiredOfyycCold

Jdahunt - you may benefit from READING what others post.
I don't recall Captain Bill ever saying that a shadow inventory exists, quite the opposite actually (at least in terms of the greater Phoenix area which is the basis of this forum).

Correct, I do not subscribe to the shadow inventory theory.

Most of those who subscribe to the theory would opine that every home that is underwater should be counted as part of the shadow inventory; and that is unrealistic. Many homes that are behind in a payment but less than 90 days in arrears (has not received a NOTS) may already be on the market as a short sale, and already counted in the inventory. Many of those in arrears may have just missed a payment temporarily and plan to catch up.

Because the shadow inventory theory is full of speculation, with many of the homes that one might consider as shadow inventory already on the market, my opinion is that we have to look at the facts and see the trends in NOTS.

That being said, I do look at the Notices of Trustee Sales (NOTS) and Unlisted REO's as a shadow inventory because we know as a fact that these exist and we can track them. However, even with those NOTS houses, many of them are already on the market as short sales.

Below is a chart that I've posted previously, courtesy of the Cromford Report that shows this type of shadow inventory in Phoenix Metro. If there is going to be an influx of NOTS, we will see it here first. I posted earlier in another thread that earlier this year B of A and another bank had a jump in NOTS, but that was not followed by many other banks. You can see that result in the chart below.

15,500......Current NOTS......Down from 35,000 in Nov 2010
3,800........Unlisted REO's.....Down from 8,000 in Nov 2010

It's mostly because of this declining REO inventory that we are having the severe shortage in the lower price ranges.

[jdahunt]

Captain you made a comment that the shadow inventory so some extent has always been around, that is what I was refering to.

[Captain Bill]

Originally Posted by jdahunt

Captain you made a comment that the shadow inventory so some extent has always been around, that is what I was refering to.

Yes, and I think I clarified it in the post just previous to this.