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If there are a lot of empty houses they will have to come to the market some time, facts are pretty clear all over the country that there are a lot more sellers or soon to be sellers then there are buyers or buyers that can be approved.
This is an incorrect assumption. When one sees an empty house it does not mean that it isn't on the market, or accounted for in the inventory of bank owned properties.
I have a list of every bank owned home in the valley, that is updated daily. I also know how many bank owned homes are currently listed, and subtracting that from the total number, I know how many are in the process of being listed (it takes a bank about 2 months to get it listed) and some that are apparently being held back. I've posted that information several times on the forum. The total number of bank owned homes in May 2011 was around 19,000. Today it's around 7,500 and continuing to decline for the reasons that have been discussed in this thread and others.
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The other thing I'm seeing is a lot of pending sales change to back on the market....people just can't get qualified.
There are a lot of homes that go Pending and then fall through in escrow. It isn't all due to financing. Much of it is when large repair issues are discovered during the home inspection, and the seller and buyer cannot agree on the repairs.
The real factors to watch are the number of Active listings and the number of Sales within a city, zip code, and community, and the rate of Sales, along with the increasing or decreasing prices.
Counting empty houses can give one a very false impression of what is going on in a market.
We are going to have to agree to disagree on that one......vacant empty houses are almost always a bad thing....can't think of too many scenarios where it would ever be a good thing....except for buyers that is.
You're also assuming that banks are diligent in giving out all of the information or that it is even correct. I for one don't believe that it is.....drive down a street, if you see more than one empty vacant house, that can't be good.
So what you are telling me is that there must be a lot of vacant properties in the greater Phoenix area then?
We are going to have to agree to disagree on that one......vacant empty houses are almost always a bad thing....can't think of too many scenarios where it would ever be a good thing....except for buyers that is.
You're also assuming that banks are diligent in giving out all of the information or that it is even correct. I for one don't believe that it is.....drive down a street, if you see more than one empty vacant house, that can't be good.
So what you are telling me is that there must be a lot of vacant properties in the greater Phoenix area then?
I didn't say vacant homes are a good thing. I said that is not a way to measure the market. If it were, then I would be out counting vacant homes.
The market data is the best way to determine what is happening in a market. I have access to all of the Phoenix area real estate data. I understand the data, and how to use it. This is my business. It's what I do, and I know what I'm doing.
Others on this forum also understand the market very well because they have been studying and keeping track of this market for a long time. They are also trying to tell you what the market is like here, and it seems to me that you're trying to tell us that we don't know what we're talking about.
I'm not assuming that banks are diligent in giving out information. My list of bank owned homes, updated daily from the Cromford Report, is an accurate count that comes from the county records.
Each time a home changes ownership the deed is recorded. The Cromford Report gets all of that data from the county recorders office; not from the banks.
I'm not telling you that there are a "lot" of vacant properties in the Phoenix area. I'm telling you that there are about 7,500 bank owned homes that are either Active, Pending, or in the process of being listed.
I'm also telling you that many of the short sale homes that are vacant, are under contract and being negotiated with the banks. That takes several months and during that time the home will show as AWC on the MLS, and "may" be vacant.
You can conclude that that number is a "lot" of homes, or you can conclude that as to the total number of homes in the greater Phoenix area, that is a drop in the bucket. That is up to you. I just provided the number.
If you want to count empty homes to measure a market, that's certainly your prerogative, but that information will not help you when you go to make an offer on the very few homes that you'll find in the $100-$150k price range.
We're all trying to tell you that the pickings are very slim in that range. It's up to you what you do with that information.
In a few short weeks you'll find out. I truly hope you're able to luck out and come back here to say that your found your dream home, made an offer and got it accepted within 24 hours with no competition. But unfortunately, the reality is the chances of that happening are very slim.
The shadow inventory is not there, so that isn't going to help us. It is a ghost.
At the beginning of the housing crisis, banks simply wanted to get rid of their inventory so they could get the losses off their books. After the bailout, they managed to get their accounting and finance under control. So now they want to minimize/reduce loss, and in the process surprise wallstreet on the positive side. Then the bankers can get big bonus checks once again.
How do they do that? One way is to manage their "shadow inventory". This inventory will never be allowed to apply negative pressure to home prices. So the banks would drag out the sale timeframe, to allow time for the sale prices to climb. In fact, banks would create an artificial lack of supply. They talk to the hedge funds, and offer them attractive financing (we, the 99%, will never get those rates/terms) and other incentives to purchase whatever is on the market. This would move the supply and demand curve, and add pressure to increase home prices.
This is like selling new homes... creating artificial supply constraint to move the price point. New home builders never pushed their inventory out for sale all at once; always 8 to 10 homes at the worst location first (near a busy street), and quickly raise prices as the location move to more desirable locations (near parks). New home builders never lower prices in later phases - they use more subtle concessions such as rebates, better financings, or upgrades, if the market condition deteriorates.
So as long as there is significant (shadow) inventory held by banks, my contention is that home prices will actually continue to rise. Once the banks are non-players, then the market will settle back to equilibrium.
At the beginning of the housing crisis, banks simply wanted to get rid of their inventory so they could get the losses off their books. After the bailout, they managed to get their accounting and finance under control. So now they want to minimize/reduce loss, and in the process surprise wallstreet on the positive side. Then the bankers can get big bonus checks once again.
How do they do that? One way is to manage their "shadow inventory". This inventory will never be allowed to apply negative pressure to home prices. So the banks would drag out the sale timeframe, to allow time for the sale prices to climb. In fact, banks would create an artificial lack of supply. They talk to the hedge funds, and offer them attractive financing (we, the 99%, will never get those rates/terms) and other incentives to purchase whatever is on the market. This would move the supply and demand curve, and add pressure to increase home prices.
This is like selling new homes... creating artificial supply constraint to move the price point. New home builders never pushed their inventory out for sale all at once; always 8 to 10 homes at the worst location first (near a busy street), and quickly raise prices as the location move to more desirable locations (near parks). New home builders never lower prices in later phases - they use more subtle concessions such as rebates, better financings, or upgrades, if the market condition deteriorates.
So as long as there is significant (shadow) inventory held by banks, my contention is that home prices will actually continue to rise. Once the banks are non-players, then the market will settle back to equilibrium.
I am sure there are people who disagree but this is a well thought out explanation. Thanks
I remember when my wife came home and told me that Merril Lynch was starting to sell mortgages and the rates were crazy low. I told her at the time that it just made no sense....well today we now know it defiantely didn't make any sense.
I quit watching my area's home prices about a month ago, after a year of it. I did see a lot of prices falling and homes returning to Active status from Pending or AWC. But usually I could tell the price was set too high to begin with. I think the buyers of short sales are ok with walking away from a deal if the bank isn't moving fast enough or if anything spooks them, too. Or at least they were, maybe not anymore.
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Originally Posted by Home Addict
At the beginning of the housing crisis, banks simply wanted to get rid of their inventory so they could get the losses off their books. After the bailout, they managed to get their accounting and finance under control. So now they want to minimize/reduce loss, and in the process surprise wallstreet on the positive side. Then the bankers can get big bonus checks once again.
How do they do that? One way is to manage their "shadow inventory". This inventory will never be allowed to apply negative pressure to home prices. So the banks would drag out the sale timeframe, to allow time for the sale prices to climb. In fact, banks would create an artificial lack of supply. They talk to the hedge funds, and offer them attractive financing (we, the 99%, will never get those rates/terms) and other incentives to purchase whatever is on the market. This would move the supply and demand curve, and add pressure to increase home prices.
This is like selling new homes... creating artificial supply constraint to move the price point. New home builders never pushed their inventory out for sale all at once; always 8 to 10 homes at the worst location first (near a busy street), and quickly raise prices as the location move to more desirable locations (near parks). New home builders never lower prices in later phases - they use more subtle concessions such as rebates, better financings, or upgrades, if the market condition deteriorates.
So as long as there is significant (shadow) inventory held by banks, my contention is that home prices will actually continue to rise. Once the banks are non-players, then the market will settle back to equilibrium.
I don't know, I think banks are generally not in the business of holding real estate or of managing market supply/demand for it. If they were interested in making money off of home sales, they wouldn't be dumping them at fire sale prices at auction. How hard would it be to set up local 'flip' divisions themselves? A long-term vacant house is a bad thing. They can't just hold them in their portfolios until the market improves. The landscaping is dying, vandals are hovering, the HOA wants something done...
I don't know, I think banks are generally not in the business of holding real estate or of managing market supply/demand for it. If they were interested in making money off of home sales, they wouldn't be dumping them at fire sale prices at auction. How hard would it be to set up local 'flip' divisions themselves? A long-term vacant house is a bad thing. They can't just hold them in their portfolios until the market improves. The landscaping is dying, vandals are hovering, the HOA wants something done...
But if the banks are dumping them at fire sale prices regardless of losses, wouldn't you say that from 2008 to 2012 they would have dumped most, if not all, of them by now?
The way I look at it is this: after 4 years either the banks have dumped most of the "shadow" inventories, or the banks are keeping them on their books for a reason. That reason is to make money - and you don't make money by selling lower.
"We are going to have to agree to disagree on that one......vacant empty houses are almost always a bad thing....can't think of too many scenarios where it would ever be a good thing....except for buyers that is."
Vacant plus underwater loan probably means loan in arrears and future Trustee Sale, regardless of whether they have gotten around to the NOTS yet.
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"I don't know, I think banks are generally not in the business of holding real estate"
They are totally in that business. It seems counter to reason. But then again, your major financial mistakes probably have not merited multi-billions in bailouts. They eventually will write off their remaining bad loans as they go through the foreclosure process, but I do not think that they are willing/able to absorb the staggering losses in too quick a fashion. On top of the previous staggering losses.
I have seen personal reports from the Phoenix area at loansafe.org, which used to focus more on attempted HAMP modifications, but now seems to involve more strategic (or not so strategic) defaults. It is hard to find any rhyme or reason to what gets a Trustee Sale Notice to actually be issued, and then have the Sale take place without cancellations/delays. Many have occurred, but many are also in limbo.
I recall a few who posted how they wanted things to proceed faster, either because they already moved out or simply wanted things to be over with. They would occasionally answer the servicer's phone calls and explain unequivocally that they had no plans to re-pay and were uninterested in any future attempts at modifications. Even that does not seem to put one at the front of the line, with eight, ten, twelve months or more of no payments. Of course, some are enjoying the ride.
I know only one person in Metro Phoenix who is currently in major house loan arrears (obviously, I never ask the question so there might be a couple of others). I think that her last payment was in September, so we will see how long they take (Seterus-Fannie Mae). NOTS has not yet been issued.
Maybe we can come up for another term for shadow inventory. It sounds like something being monitored by Dick Cheney in a hollowed-out mountain somewhere.
We could look at this from another angle: what influential players are in the housing market, and what do they want?
I see these as big players that could move the market:
1. the president
2. the fed
3. the banks
4. the home buyers
5. the home sellers
Of the five, only the buyers want to push home prices lower. The president is in re-election year so he will (and he did) push for accomodating housing policies. The fed has been accomodating for the longest time. Banks, well, they want to make as much, or lose as little. If the banks hold even a single property, they want it to be worth a million bucks so they could sell it. They are definitely not "short" on houses. Sellers want to sell high.
Most players want to push the market higher. But who knows what will happen?
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