With interest rates being this low, and inventory so high...might not be a bad time to snatch up some deals, no?

HH
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Flood of foreclosures: It's worse than you think

http://money.cnn.com/2009/01/21/real_estate/ghost_inventory/index.htm?cnn=yes

Banks are moving slowly to list repossessed homes for sale, which could mean that housing inventory is even more bloated than current statistics indicate.


NEW YORK (CNNMoney.com) –– Housing might be in worse shape than we think.

There is probably even more excess housing inventory gumming up the market than current statistics indicate, thanks to a wave of foreclosures that has yet to hit the market.

The problem: Many foreclosed homes and other distressed properties that are now owned by banks have yet to be listed for sale. The volume of this so-called 'ghost inventory' could be substantial enough to depress already steeply falling prices when it does go on the market.

"That's not good news," said Pat Newport, an analyst with IHS Global Insight. "[Excess] inventory is the biggest problem in housing these days, and it leads to lower housing prices, which leads to more foreclosures."

RealtyTrac, the online marketer of foreclosed properties, recently discovered that it has far more foreclosed properties listed in its database, which the company compiles using courthouse records, than there are listed in the multiple listing services (MLS) maintained by real estate agents.

RealtyTrac looked at listings in four states, California, Maryland, Florida and Wisconsin, and found that they contained only a third of the foreclosures it has in its database.

The scope of the problem isn't clear, but it could be huge considering that RealtyTrac has a total of 1.5 million bank-owned properties on its site.

"Many properties that should be listed on the MLS are not listed on the MLS," said Lawrence Yun, chief economist for the National Association of Realtors (NAR).

Underestimating inventory
The National Association of Realtors calculates official housing inventory statistics using data from the multiple listing services. By that measure, there were 4.2 million existing homes for sale in November, an 11.2-month supply at the current sales pace, up from a 10.3-month supply in October.

But now it seems quite possible that these figures, which are already at record highs, are underestimating the situation. And if that's the case, it could take much longer for the housing market recovery than analysts currently expect.

Until supply can be brought down to a more normalized level of six to seven months, home prices will continue to come under pressure, according to Yun.

"It could be a worse problem than we think," he said.

L.J. Jennings, a real estate broker with Pyramid Real Estate and Investments in Oakland, Calif., sees plenty of evidence that it is.

"There are a number of properties in my area that have actually been taken back by the banks, but have not hit the market yet," he said. "Once a bank repossesses a property, in some cases, it can take more than six months to hit the market."

He cites a handful of examples offhand, including a single-family home in Richmond seized in early October, a condo in San Ramon taken back the same month and a four-family building in Oakland that was repossessed in July.

"Either lenders are overwhelmed and can't get these properties back on sale quickly" said RealtyTrac spokesman Rick Sharga, "or they're deliberately slowing down."

Why there's a delay
The chief problem is probably system overload: Lenders are just not prepared to handle the sheer numbers of foreclosures that they have on their books. Banks took back about 860,000 in 2008 - more than twice the number in 2007 - according to RealtyTrac. Before the housing crisis hit, it took only about a month to get a bank-owned foreclosure on the market.

Lenders still insist they try to act as swiftly as possible. According to Tom Kelly, a spokesman for Chase (JPM, Fortune 500) Mortgage, their goal is to cut their losses on these homes, which are expensive to maintain, as fast as possible.

But banks might hold back listings in areas where they already have lots of homes for sale in order to avoid flooding the market, according to Michael Youngblood, a financial analyst and founder of Five Bridges Capital, an asset management company.

"If lenders have a significant number of properties in a limited area, they may want to stagger putting them back on the market," he said.

Eve Alexander, a real estate broker with Buyers Broker of Florida in Orlando, attributes the delays to the general malaise that's overtaken the lending industry as it's imploded.

"I think banks are dragging their rears about doing just about everything," she said. "They have so much going on, and there's so much red tape and the people don't care, nothing gets done."

There are also batches of bank-owned homes that don't appear on the multiple listing services because lenders are trying to sell them via bulk and auction sales to investors as well as individuals, according to John Mechem, public affairs director for the Mortgage Bankers Association.

He adds that it's also taking much longer to get many foreclosed homes in decent enough shape to put on the market. (see This home for sale stinks.)

Bank-owned properties are in worse condition than ever because the foreclosure process is taking longer than ever. As much as a year can pass between the time a borrower first misses a payment and the final auction sale, according to Youngblood. During that time, houses often deteriorate because owners have neither the money nor the incentive to maintain them. Some disgruntled homeowners may even deliberately damage homes before they leave.

"According to our servicing folks, it's taking more time for lenders to get properties in saleable condition," said Mechem.

The phenomenon of a growing ghost inventory doesn't promise to get better anytime soon, as long as the rate of foreclosures continues to ravage the market. There were more than 3.1 million foreclosure filings in 2008, according to RealtyTrac.

Said Sharga: "I don't see how we can avoid another 3 million in 2009."

"Either lenders are overwhelmed and can't get these properties back on sale quickly" said RealtyTrac spokesman Rick Sharga, "or they're deliberately slowing down."


The Red ne.

Everythings fine folks............no need to be alarmed.
The sky is not falling.

"Lower prices" do not "cause foreclosures".

The homeownership rate is at least 3.5% above where it should be. We have about 4.5 million homeonwers who should be renters. It will take many years to absorb that inventory.

Pmc

Lots of houses here for sale or empty, but the prices havent come down, so they sit.

I sell foreclosures for the banks. There is plenty of the green one going on. The banks have more properties than they know what to do with, and they move slowly on the ones that are actually on the market.

The banks are in quite a quandry. They don't want to evict, because then they have to pay to maintain the home. They don't want to put a lot of houses on the market because too many people are hesitant to buy right now and they don't want prices to plummet.

Unemployment has jumped .

Even higher then the national average in this area .

more and more houses are for sale every week,and there are more and more
foreclosures.

The wife and I live in a modular that we own on a rented lot .

We have money in the bakn and we've been aiting on priced to drop to levels
that are more affordable .

Question :

Why the hell aren't house and property costs dropping ?

Many of the same properties have been for sale fore a year and the prices are the same or higher .
If you drive the main drag through town 2 out of 3 houses are for sale and
around half of the businesses have closed.

Shouldn't property prices be dropping ?

WTH ?

We've got the money and great credit to get a loan, but the damn prices have been going even higher !

That's actually not true.

Many people, when faced with a loan that is becoming more upside-down by the month even when making the payments, simply mail the keys into the bank or stop paying altogether.  There are even websites that help you in this process, how to to stall the banks as long as possible, how to get out cleanly with  your credit intact.

An acquaintance of mine is busy buying up foreclosures in MI and renting them out.  He claims the renter line is a mile long, so he'd might as well buy, fix and rent.  I don't know any of his numbers (yet), but he says the foreclosure rate is ridiculous.

the old 'what percent of the population should rent' question...

my question is... what about them million dollar forclosures..? who you gonna rent them too?

Hmm... Maybe a good idea to buy a couple to rent.

This is what I'm seeing. It's taking a bit for desperation to set in. The banks are counting on "Uncle Sugar" to buy up the shitty properties, so they will sit on them. I say "FUCK THE BANKS".

Come on down... they have been dropping like rocks here...

I have seen 2/2/1's for 30K.

So I looked on that website, and there seem to be a lot listed but are there any other good websites out there for that kind of thing?

I'd like to know of a few as well, specifically north Texas, ready to buy.

I don't blame them. They made a mistake taking those crappy loans, but most people only have one shot at home ownership, so the prudent thing is to walk away, even if the credit rating is damaged.

I know some here will say that's not being honest or living up to your agreement, but my take on this is it's a business agreement, not an issue of giving one's word to a friend. Businesses do it all the time and no one accuses them of being dishonest. If a business goes under, they walk away. It's nothing personal.

Thanks but no thanks .

PA has been my family's home for a couple hundred years .

This is where we belong .

Perhaps if you extend that offer to Murtha he'll take you up on it and
GTFO of PA so we can fix his mess.

I am selfish . I have been sort of  looking to buy a house for the last 18 months.

I am still Pre-approved for a VA loan

I like the way the market is going. soon I may be able to buy a home for close to what I feel like paying as opposed to the several years of dot com like run ups in value.

I am starting to look for an additional house, but I'm gonna be waiting a while yet, it looks like, until I get a price I want

I've been hunting the market for my first home over the last 8 or so months. I gotta say it's definitely a buyer's market, but depending on your area I wouldn't wait too much longer. I put an offer down Saturday that was $40k under asking.

I was talking with my agent and we both noted that a large number of homes were now for rent, some of which are foreclosures (or in the beginning stages). There is quickly becoming an excess inventory of rentals, many of which cost more per month than a mortgage itself (the house I put an offer on wants $1700/month for rent, but the mortgage (PITI) is only $1100!

If a good property comes your way, don't feel bad about throwing out a low offer. But don't get greedy and wait for two years - a buyer's market also means alot of shoppers - many of which are looking at the same bargains you are.

I've noticed lots of houses near where I live that the cars never move (many do not have plates or have a flat) and the lights never change.  Its really telling when the neighbors start parking in the vacant house's driveway.  Its only a matter of time until Section 8 moves in if the banks do not find buyers soon, and they do not even have realtor signs up on most of those houses. The ones that are for sale with the original owners (vs the banks) are still asking 2006 prices.

Kharn

One more point: I also question the partiality of this article as it seems to rely on Realtytrac to determine the health of the real estate market. Realtytrac makes money by selling subscriptions to people interested in foreclosed properties. Want to sell more subscriptions? Make some claims that the market has great opportunities in foreclosed homes.

I'm sure there's some truth to it, but they've got a stake in this as well.

Not yet.  Housing will go down for another year+, up to 3-5 years.  Then it will stay steady for a bit, then start to rise again.

The price isn't going to hit bottom until the economic fiasco we are in is over.

The real deals will be in 1-3 years or so.

I woudn't buy one right now, either.
According to this website, we have a long way to go.
As Dave Ramsey says, 'Real estate profit is made at purchase not at selling'
http://patrick.net/housing/crash.html

Let the banks sit on those homes.



After all they will be the ones paying the property taxes right? Or is there some law exempting them from paying property tax?

I bet there is a law exempting banks from paying property taxes on homes they have for sale.....otherwise they wouldn't be sitting on them.

This shit is all fucked up!!! I'm in D/FW which should be a better market than most but sick.

Looking for a house I hear over and over, I got a buyer but they gotta sell first. Bullshit.

Call the bank for a foreclosure (good luck finding a number, the right hand doesn't know what the left is doing and most of the time they have to list it - won't sell direct - WTF????). RT and the likes - they aren't helping - you gotta PAY and you don't get a banks #.

EVERYBODY thinks their house is worth more than it is, it takes them 6 months to figure that out, bank is no exception. They get insulted when you make a fair offer. Completely clueless and why it's all fucked up to begin with!!!!!

After paying 6 months and adding 6% to the sale price plus add in closing costs that all sellers are paying, further increasing the sale price, the original offer the buyer can live with is too high to take a risk.

The only way for things to change is if folks sell at 10% off and are willing to pay Title and allowed closing costs to the limit.

I see empty houses either owned by people in good standing with the lender or REOs - owners are sitting on them and banks aren't posting/processing.

As a buyer I'm sticking to my guns, I'm not gonna be a bagholder.

</rant>

ETA: Courthouse steps are not a place to buy, asking price is based on defaulted loan amount not real value and you can't see what you're buying first. Just becuse a house is listed in RT as "a notice went out" - which you can get for nothing doesn't mean it will be there the day the auction takes place even if you were crazy enough to buy for primary residence. If you were an investor and bought 10 and 1 or 2 were bad the others would help even out the fuckups.

I really doubt the trough is going to be this year or even next year.  If I get a chance I'll try to look at the last housing bubble and see where the trough occurred.

"Short Sale" signs are now popping up everywhere down here. I've got $ and credit to buy but I'm waiting this out for a while longer.

I see real estate experts on TV saying now is the time to buy.
I say bullcrap . I think we have along way to go.
YMMV

JUST heard on FOX:

Sales of EXISTING HOMES ROSE 6.5%.  I believe the reporting period was December compared to November 08.  The sales were well discounted though no number was mentioned.

That news, while good, in now way ameliorates the huge repossession over-hang still existing.




5sub

Good, release the excess foreclosures, I need a new house

Declining home values in a world of declining interest rates.  Just wait until interest rates go up.  Reduced purchasing power by borrowers and further downward pressure on values.  I do not believe the housing market is near bottom.  Throw in our present deflationary economy (reduction in wages) as icing on the cake.





 

Sounds like the "Wal-Mart downgrade", in which people who stop shopping at Target and Sears etc. replace reduced sales to existing Wal-Mart customers.  Possibly people who would have bought new have downgraded to used, causing used sales to lift a bit while new sales crater.  

For what it is worth I know lots of people in the banking industry and they are all very busy right now.  Property is moving around here.  We had 5 showings in 6 days on a home we're selling.

There are 42 properties pending and 20 more have closed since Dec 1.  This is in a town of 25k

We bought in that time period.  There was a thread discussing this a couple days ago.

The scenario:  Developers have unfinished subdisions and new homes listed at ~$100-$125/ sq ft (nicely equipped).  You can buy a 3-7 yr old home nicely equipped for ~$70/sq ft.

Why buy new when you can get damn near the same thing for 30-40% less?

I have a house now, and yes I am making the payments thank you.  But I want to move out of the city.  I am within twenty miles of at least three military bases, read megaton bullseyes.  I would rather move further west and commute.  I can work at home some days as well.  I would love some acreag out in the boonies with a well and and a basement.

Remember kids, if you buy a foreclosure house, make sure you pony up for an owner's title insurance policy due to the increased likelihood that the documentation is screwed up.

Tell that to the "mortgage walkers".

In B 4....


GR

This....


GR

The banks knew they would be bailed out by the government..there fore they had no incentive to lower the prices on these houses.

I looked at many foreclosures in Phoenix a few months ago and the number of dilapidated foreclosed houses that were in need of 50K in repairs that that banks wanted 20K below TOP market value were numerous.

Now im sure this is not the case in Detroit and other "organised communities" in the US

I am one of these people.

According to the county tax assessor's letter I received on Saturday, my home is now worth only 2/3rds of what I paid for it.

That's $100k gone in roughly 3 years, with $71k of that being this past year ALONE.

I can make my payments, but at this point, why continue?  They're HALF of my monthly income.

Send me information on what these websites are, because right now - even (especially?) with a family to support - I'm frantically searching for a good reason to not sell all the non-essentials, pocket the money, and cut my losses.

_MaH

We have a friend who's in a similar situation.  They are setting up for a short sale and have listed the house higher than it should be, and are now waiting the required three months before a short sale.  After three months they are going to contact the bank and attempt to keep the house at a reduced price. Otherwise it will short sale.

You couldn't afford that house regardless of what it's worth now.  





 

All the more reason I'm considering sending the bank some "jingle mail".

_MaH

the banks need to keep people in their homes even if it free for a year or two and stick it on the back end of the mortgage. it would cost us the tax payers a lot less and help turn the economy  around that much faster

You're part of the problem.

Not yet, I'm not.  I continue to make my mortgage payments on time and in full.

Remember that.

_MaH

Parents are looking into buying another home, but are at balking at the prices.

Urban area homes are still over priced.  

It's a buyer's market.  No shortage of houses.  Most sellers are still in denial