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This makes a lot of sense to me. I don't know how anyone could argue with it.
Come on! This is a forum! You already know that 40% of the people who read my post will think I'm crazy and 5% are already considering flaming me!
It's just my theory. If anybody disagrees then posit a different theory about why banks don't just dump all the garbage right now and end it.
Or coming at it from a different direction, tell us what would happen if right now today all the banks decided to dump all their garbage immediately.
I don't see any way the market wouldn't totally collapse. And more importantly, I see no way that mortgage lenders would survive a collapsed market. They have a tiger by the tail and they can't let go without risking death.
That is IMO why banks aren't dumping their non-performing mortgages except at a measured rate.
So to put it in simple terms, if the banks dump all their non-performing holdings on the market for whatever they can get it would be the financial equivalent of suicide. They know this and they are exercising restraint and hope their competitors will do the same. They're selling their non-performing properties at a measured rate that is whatever the market can bear without collapsing..
I have quite a different theory. Yours does not work, because that would require all the banks to coordinate their efforts by some governing unit, issue quotes on "releases" and so on. Just like OPEC does for the oil. I am not sure that with bank such a governing body exists (somebody who coordinates the ratio of properties put on the market by banks for ALL the banks).
In my view point this is simple: small nice bank and mortgage companies run by real people - do well selling their properties. They hire good agents, provide fair commission and such.
But with really big corporations - things are different. they are run just partly buy people, by mostly by corporate system. People who are in charge - they simply do not care that much. They are not paying the losses of the bank from their own pockets. That is why it takes a long time for a property to make its way to the market and often it is represented by some phony agents, who also do not care.
This makes a lot of sense to me. I don't know how anyone could argue with it.
I can. I think it is actually a rather naive idea.
it is same as saying that the property prices are so low now because buyers try not to buy too much , since too many home purchases will make the prices go up. So, buyers sit and wait.
I can. I think it is actually a rather naive idea.
it is same as saying that the property prices are so low now because buyers try not to buy too much , since too many home purchases will make the prices go up. So, buyers sit and wait.
I actually do not disagree with what Lovehound posts.
However, its not anywhere close to public knowledge. Yeah many of us can figure it out. But most people DO NOT go searching around internet forum.
All they hear is occasional talk in news articles about shadow inventory which they don't even define.
I'm of the opinion that the public ought to be aware of this phenomenon and ought to incorporate that knowledge into their decision on whether or not to purchase a home.
I have quite a different theory. Yours does not work, because that would require all the banks to coordinate their efforts by some governing unit, issue quotes on "releases" and so on. Just like OPEC does for the oil. I am not sure that with bank such a governing body exists (somebody who coordinates the ratio of properties put on the market by banks for ALL the banks).
Actually if the banks got together secretly and colluded to fix market prices that would probably be criminal.
Rather, I see it more as do or die, that bank directors know that a total housing collapse will cause the bank's demise too, and every director of every bank understands that. They exercise restraint in selling off foreclosed houses and not dumping them all at once because they know the result of dumping will be a catastrophic drop in housing prices and a corresponding catastrophic drop in their assets, enough of a drop to put them out of business.
Folks it's just my theory. I'm just an ordinary homeowner, not in the real estate business, know nothing other than what I see, what I read, and a couple economics classes in college.
I haven't seen any other plausible theory to account for banks not getting rid of foreclosed houses as quickly as possible. I scoff at the idea that they are waiting for prices to recover.
1. The banks are withholding inventory in massive amounts.
2. The banks are ultimately stabbing themselves in the foot, I suppose because they believe the govt will prop them up every time they fall.
1-No
2-Yes, but not for the prop up reason. They don't have the staffing to go any faster.
My example proves it. If you want to research the address, I'll provide it.
Its in City of San Fernando in California.
Home was foreclosed around June or July.
Its been sitting vacant since with no listing, auction, or sales activity.
If thats not legitimate shadow inventory, that the bank is intentionally withholding from market, with the express intent of artificially restricting supply, I do not know what is.
My example proves it. ... Home was foreclosed around June or July. ... Its been sitting vacant since with no listing, auction, or sales activity.
One example proves nothing except that it's possible for that specific house to sit vacant with no listing, auction or sales activity ... that you are aware of. Your example tells us nothing about the reason for that.
One example proves nothing except that it's possible for that specific house to sit vacant with no listing, auction or sales activity ... that you are aware of. Your example tells us nothing about the reason for that.
I think along with research done on other sites...I posted a quote and link in another thread indicating a part of Los Angeles with exactly 1 foreclosure listed on MLS combined with a shadow inventory of 100(!?!?!??!).....there is sufficient evidence of the shadow inventory.
The reason IMO is irrelevant. My purpose of posting this information is to let people know that this exitst and that purchasing a home in this area for investment or even with the intent to "break even" is not going to work.
In other words, people that are purchasing in part due to those reasons, ought to reconsider.
Would I like to see sales come to a screeching halt? Yes.
I don't like the gamesmanship, I don't like that REA are aware of this but won't tell their clients.
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