Housing Market 3 Times Worse Than You Think

[Mike1306]

Originally Posted by MikeyKid

Seriously - you're telling me that the banks don't know (and couldn't print out tomorrow) the number of mortgages that are 1month, 2months, 3months+ behind... You think they couldn't dump all of that into a massive spreadsheet? You don't think that certain regulatory bodies don't have access to that? That's your shadow inventory.

Companies like CoreLogic exist to data mine the stuff.
CoreLogic | Home

So, people may write about these things in their pajamas - but I'm not certain of the relevance to your post as at the end of the day inventory is inventory.

Being Corelogic only covers about 63% of the counties in the U.S. their data is not going to be as accurate as you would like.

Is Texas one of the places they don't cover since there is much that isn't recorded in Texas as part of public records? Or is it some harder hit counties that aren't covered? Not knowing this important information and how it impacts the numbers they come up with makes me question what they report.

It is like a few years back when news reporting agencies were using Realty Trac numbers to count foreclosures and were counting some houses twice because they would count the 1st and 2nd mortgage on 1 home.

And I am sure banks do know exactly how many people are 1,2,3 months behind but there is no way, especially since some areas are seeing jobs coming back, that they can actually determine how many of those will go to foreclosure. Yes, they can use percentages from past performance but are they going to use performance from 2 years ago, 4 years ago? How accurate will that be?

These and other reasons are why shadow inventory is just a guessing game and one that helps writers get people to read articles. Because it is alarmist.

[jade408]

I believe it. Case in point, I hope to buy this year. I know, crazy talk. But the prices in my target neighborhood are very close to what they rent for, so it seems like a good bet.

I have bee to a few open houses, since I made this goal late last year. I saw a few buildings that were great -- I am shopping for a condo. I decided to favorite every home in the building in Redfin. As off-market favorites. I have around 70 or 80 of these marked in my target neighborhood. Since I did this in October/November of last year, every 2 weeks one or two of these goes on the market. About 40% are because of foreclosure or short sale. And these are ones that are actually listed, not in the "realty track" or other foreclosure service. The foreclosure services add about 5-10 to the total at a given moment.

My target neighborhood isn't distressed, it is a new area of town that was reclaimed for residential and they built a ton of housing during the boom. Some buildings converted to rentals, but many sold out. Some sold later and dropped prices in phase 2 construction. Most of buyers from 2005-2008 are underwater, because obviously the homes were overpriced. Also, it isn't a family neighborhood, so there is absolutely turnover due to changes in life stage.

In my current neighborhood, foreclosure is much less common. There have been one or 2 in my 25 unit building, but the bulk of the buildings are doing fine in the area. There aren't many foreclosures, and many people bought before the boom (it is an area of town that has been condo for a very long time) so the prices were not so ridiculous or the owners are empty nesters that downsized.

Considering my target neighborhood was way overpriced, more foreclosure are to come. I only added a few buildings to my list, some are probably doing much worse.

[Sugar13]

My market is North Of Pittsburgh and our market is hot. Our market was not really affected by all the inflated rip offs in other parts of the USA.

[RobE]

Originally Posted by mortimer

What about involuntary landlords?

I don't know anyone who is about to be foreclosed on or who has gone
through it, but I know a number of people - against my advice - who are
renting - waiting for higher prices. What percentage of those "landlords"
are going to give up someday and just bail on their money-losing venture?

Well, I hope they will hold on for a few more years. We have a number of involuntary landlords in my development here in Washington state. In fact, our HOA, realizing the state of the market, has chosen to look the other way even though rentals are forbidden in our CC&Rs. So we have no empty houses and I would like to see it stay that way. So far, the renters in our neighborhood have been responsible people.

[RobE]

Originally Posted by Mike1306

These and other reasons are why shadow inventory is just a guessing game and one that helps writers get people to read articles. Because it is alarmist.

Well, the media trying to fear monger its way to ratings is hardly a secret. They've been pressing that pedal to the metal especially since 9/11. But the one thing that lends such "alarmist" reports credence in the minds of the public is that the NAR, their members and the banks hardly have clean hands. This is where dishonesty in one's industry results in blowback for everyone involved in it, not just the specific perps doing the bad deeds.

The best thing realtors can do is organize and really press for getting known bad actors out of the industry (or at least exposing them), but few have the courage to step up to the plate because the first reaction of any company is to go on full metal bunker mentality and lash out at the messenger rather than ameliorating the problem cited in the message. So real estate will always be tainted with the same stain that used car salesmen are afflicted with as a result.

The industry is what you will make of it realtors. And you deserve credit or blame depending on which route you choose to go.