San Diego Housing Bubble News and Analysis

It would be interesting to be able to break these numbers out area by area, Antelope Valley is a lot different than most of SD or even Temecula for that matter.

Yep, they always drag out the worst areas as examples-you wouldn't gauge the health of the stock market based on FNM or AHR would you?

Perhaps my calculator is malfunctioning, but how does 1.2m + 1.5m + 217k = 7 million?

the 1.2, 1.5, and 217k, aren't part of the inventory yet. So maybe they dind't mention what's actually in REO yet.

Enough is enough, this is all just a conspiracy. Let's all just focus on the real facts like 1) Swine Flu is deadly 2) Michael Jackson is still alive 3) Walmart just ran out of tin foil hats.

Folks these are the real issues. The fact that the banks are hiding inventory is just as silly as saying Iran and Israel will be at war before the end of the year.

I am focusing on the truth from now on. I have no reason to believe the FDA, the FED and our politicians are selfish, greedy and power hungry. They want what is best for me and my family. If you don't believe me just watch TV.

Oh yeah and one more thing. I just saw an ad on Craiglist and it said something like, We have millions of rentals to choose from just email us back at johndoe [at] citibankreorentals [dot] com. I'm gonna get me one of these bank rentals, I bet they come attached with a big brother camera system (they call it a security system)!! I will feel protected in my REO!!

Or 70 virgins just sounds better than 20 virgins, if you are going to make up numbers, might as well make up good ones.

I wouldn't be cynical if I hadn't been reading the same story for years, it chaps my ass even more because a few years ago I believed it. I should just smile and be slightly amused the way I am when 5 year olds talk about Santa Claus coming. The assumptions are where the problems lie, it isn't a conspiracy, it's false accounting by those peddling the theory.

1.2 million loans missed 3 payments, o.k, that's 1.2 million repos. NO!, that's potentially 1.2, but at no time in history did 100% of nods go not, even before bailouts, help for homeowners, loan mods, there was not a 100% nod to not. The 217k without a payment for a year, those are probably all going to end up repos, but how many of the 1.2 are doing it on purpose to get a loan mod, how many of the 1.7 million in the process will be sold as short sales. Do you realize that every short sale takes one away from these lists, check redfin who breaks out the shorts for you, shorts are a dominant force in the market now. Short sales are starting to go through, that is taking a serios bite out of the foreclose numbers.

Or you can get a tin foil hat and hang out with Micheal Jackson, but Santa Claus isn't coming and neither is the Shadow Inventory.

The guys that put together the case/shiller charts have never been discredited to my knowlege, unlike the mr mortgages and peter schiffs of the world, until they screw up, their charts are legal tender in these parts.

At least 6 more of the 1.2 million with missed payments wont be going to the shadow inventory. I just their short sales over the last 2 weeks.

Thats legit.
I just closed one today (with and nod and an not) and have approval to close on 4 more.

All of those have NOD's recorded.

Likely NONE of them will end up as REO's.

sd and urban, on that topic, is it just you guys or is it just a whole lot smoother now? Last year, after a couple of failed tries, in which nobody got the house and the bank took it back and sold it themselves (for less in some cases, more in others) I swore them off because of the frustration and wasted time. Now I have a couple of new neighbors who recently bought their houses as shorts and report pretty smooth transactions and their houses are in a hell of a lot better shape than mine was. I see alot of them going through where before almost none did and they are more than 50% of the listings in my zip code. Have shorts found their time and are there enough of them to impact the foreclosures? I don't know, it sure looks like more than a niche to me and something that never gets mentioned in the foreclosure doomsday articles.

This caused me to do a little research using redfins short sale breakout feature, In my zip code shorts are now 2/3 of the listings, then i ran san marcos 92069, 3/4 of the market, vista 92083, 2/3 of the market. I stopped there, I guess i could have gone on but I don't know all that many zip codes by heart and redfin doesn't allow me to run a search of a larger area, once you hit 500 listings it doesn't give you the numbers. But in some areas, probably many areas, shorts are the market and most shorts are in some form of distress and by their very nature they are underwater.

If video killed the radio star, will short sales kill the shadow inventory? Maybe I should e-mail the buggles with my idea for their next song.

http://www.dsnews.com/articles/new-housi...
The housing crash is about to come back with a vengeance, as 7 million new foreclosure properties are about to hit the market, analysts at Amherst Securities Group LP said this week.

It's the same article rehashed by a different reporter, nice headline, but I want the date.

The first guy they interviewed said this

“There’s going to be a flood [of bank-owned homes] listed for sale at some point,”

Great!!! And at some point I will die, someone will win the lottery, someone gets to sleep with beyonce. That does nothing for me, I want to know who and when, if it's me, then I can use that info.

At least the B of A person they interviewed said this “We are going to see a spike from now to the end of the year in foreclosures as we take people out of the running”

That person didn't say 7 million, they said spike, but at least they gave me a when, On December 31st, I'll reset this thread, if it doesn't happen by then, it's bigfoot.

Still no info on where they got the 7 million number, I can't dispute it or believe it because none of these article say where it comes from or how it was determined.

The quoted experts from both articles is a 15 year old company that sells mortgage backed securities.

http://www.amherstsecurities.com/index.html

I could not find anything on their website regarding how they gathered the info for the obvious press release that they sent out. Since when is an mbs dealer the new authority to debunk case and schiller, something stinks in denmark.

I dont think they are any easier now than 6 months ago there are just more of them. Discretionary selelrs have left the building for the most part. A ton of short sales got listed in the Winter and many are closing now. They are the market in many ZIPs. New short sale listings have dried up a bit but I expect an outpouring of love coming my way in the next 6 months again. There are just too many folks out there without equity hanging on by a thread. The economy will continue conspiring to push many over the edge. I'm hoping/expecting 2 more years of this party.

All data is wrong. It's just a matter of how much.

15-20 million homes underwater. How many strategic walkers stashing there mortgage payment away, waiting? 10%, 20%, 30%

With over 6 million job losses over the past 12 months. How many homeowners in this group that are sitting in their home not paying? I'd say over a million at least.

I think residential is like 9 percent delinquent which is probably 8-9 million mortgages.

The vast majority of metropolitan areas prices are still decreasing.

You know the number is going to be high and 7 million is probably in the ball park.

Job losses are still flowing.

Arraya in the perfect scenario prices will continue to drop, but I must say our government is becoming very good on the supply side of control. I am on the east coast for a month in search of RE investments and funny enough they are few and far between.

I have been to trustee auctions from Florida to the Northeast and if you think the banks are taking less than the failed mortgage amount you are mistaken. Banks are playing into the same game as the FED (maybe because they have no choice). Florida is a scary place right now. The condo associations will probably start filing BK in the boat loads as many are just walking away). SFHs in places like Florida are still way over priced and have a lot of room to drop.

It doesn't matter how much inventory the banks hold, how many more there are to come and where unemployment is because the banks are obviously in no need to unload inventory or by FED standards are unable to. I truly believe our government has a much bigger plan than any of us can imagine. Even if there were 3-4 million in the shadow inventory on the horizon there has to be a plan to create some sort of income whether it is moving the units or renting them. My guess is the plan to rent is a huge possibility. Property taxes and HOA's that remain the responsibility of the banks will create an ever bigger problem if banks continue to be on the hook for these.

I predict 2010 will be one of the most interesting times in regards to real estate in the history of this country. You can only play the same game for so long before one side loses!!!

So a house in default that sells through short-sale for a 50% bank haircut is somehow not part of the REO disaster? It’s REO disaster 2.0, as in a disaster on top of a disaster.

Nothing has changed since 2008; we are in a reset of the entire bubble. How many REOs will there be? For CA that’s easy; any house with a bubble era mortgage balance is going to go jingle mail or short sale or something. Who is going to keep paying a $500k mortgage on a house worth $300k, then $200k? Not many, and as this correction in prices drags on more people will lose the fallacy of a re-inflation of the bubble and realize RE ain’t coming back anytime soon, then they will capitulate.

The only twist was the shadow inventory, that’s the only thing we can debate. Housing is crumbling but we can keep ourselves busy wondering about all those empty homes that are not for sale.

However, banks selling homes at 50% off through short-sale is just more inevitable bad news for housing, not some argument against calamity.

Those with Option ARMS are still holding on because the teaser rate, interest only payment is still a cheap payment, that’s going to start changing soon and payments on those $200k underwater mortgages are going to shoot up.

Like any crash you have the knife catchers to consider as well. Those who bought REOs in 2008 and those who out bid the other guy for an REO in 2009 are going to end up underwater as well (many 2008 REO buyers already are), especially in areas of SD where prices are still stupid. Many of these folks will be really underwater, some will end in default as well. A small 40 year old house in Poway that was $160k ten or twelve years ago is somehow viewed as a deal at $400k today? The pain train has lots of cars.

Sure the Gov. is trying to prevent deflation but it can’t work. They will get many people to overpay along the way, but prices will keep falling. Japan tried everything to keep deflation at bay, didn’t work. 18 years of falling RE prices and counting. For CA this crash is very different, you can’t look at the tiny blips that were the CA RE crashes before. You need a long timeframe. A lost decade and a decade of knife catchers.

Sorry Charlie you missed the point. Alot of this so called shadow inventory/REO pipeline is in process via short sales (i.e. already on the market) or undergoing loan modifications.

There are also a ton of people who stopped paying on their 2nds but kept their 1st current. The 2nds wont foreclose cause they will get nothing but they show up in those stats of folks who havent paid in 3+ months. Those are defacto prinicipal reductions that arent ever talked about. Those folks will keep paying the 1st on their $500K 100% financed home now worth $350K cause they are only paying a $400K mortgage that they will get modified down to 3% for the next 5 years or so. At some point the market will come back and they will have to deal with the 2nd unless they come to a settlement earlier but you wont see those shadow homes on the amrket anytime soon either. You try to make this far more simple than it is. More than anything it shows you dont have an understanding of the inner workings of the housing market. Nothing is as simple as it appears to be.

You missed the point (again). The point is there are many facets to this disaster (you point out some) and all are bad for RE values.

My point is we have a huge inventory of shadow homes AND a growing short-sale epidemic AND a looming Option ARM issue. Oh, and I did not post a time frame for shadow market homes to hit the market.

Did I try to make it sound too simple? I thought I made a case for the situation having many “cars” on the pain train, as in NOT simple, but rather convoluted, with many aspects that effect RE now and far into the future.

All are not bad for RE values. Limited supply creates stability and or upward pressure. We have limited supply. The shadow inventory is actually a fraction of what the most bearish (like yourself) beleive. The short sale epidemic is not growing but is rather becoming more orderly and predictable. The looming Option ARM issue is a complete unknown and will likely be addressed in some shape or form (forbearances, loan mods etc.).

The worst has come and gone already. The best is a distant dream but your nightmare predictions did not come to pass nor will they. Take it like a man.

I guess this guy "dont have an understanding of the inner workings of the housing market." either, LOL.

October 1st, 2009
Shadow Inventory Case Study: Inventory in the Shadows Twice as Big as Normal Resale Inventory in Los Angeles and not on the MLS or for Public Viewing. Foreclosures and Distress Properties Clogging the System.

http://www.doctorhousingbubble.com/shado...

This part is interesting even to the ignorant:)

Keep in mind that this data is only for homes that have action being taken on. There is probably a shadow to the shadow inventory! That is, we have heard and know that many banks are not even sending notice of defaults to some late paying borrowers. In other words, there is a boatload of toxic debt out there.

I have to agree w/Rt.66 as far as what becomes of shadow inventory.

There is no denying the shadow/stealth inventory is out there. The only question that remains is what will become of it all, how it will get absorbed.

I never said they will all go to foreclosure BUT I did say that a low percentage will be modified. This is from what I'm seeing and also from what I'm reading and from NODs being kicked down the road to get new NODs and foreclosure dates and also from what Kelly wrote at VOSD.

A much higher percentage will short sell and of course it will be and has been for considerably less than peak price. Already a low percentage of sales are organic and the comps are much lower than peak.

“The worst has come and gone already” said the realtor. NAR pimp much?

To go along with the good Doctor’s article linked above, here is a look at SD:

RealtyTrac shows that “14696 properties match your search” for:
Preforclosures, Auction, Bank Owned and Homes for sale.

Of these “Resale MLS” shows just 1605 properties.

14696 distressed properties versus 1605 on the MLS. Nope, no shadow inventory to worry about (says the realtor). Even those with Elton John sized Rose glasses can’t deny those figures. Before we get into the deny the reality with arguments claiming RealtyTrac is not accurate, keep in mind we could cut that 14696 figure in half it would still be awful and still prove the shadow theory, and that realtors always default to... its a great time to buy, the worst is behind us or some other BS.

My own experience with RealtyTrac is that they UNDER-report. I know of many homes that dropped of RT and remain empty and bank owned. 14696 distressed mortgages PLUS the shadow shadow of deadbeats the banks have not yet bothered to put on notice. This mess is far, far from over.

http://www.realtytrac.com/MapSearch/MapS...

Who knows what evil lurks in the hearts of men? the Shadow knows.

although unknowable (except by the Sahdow), my gut tells me that it's not quite over.

In my view this shadow inventory is at least part urban legend part truth,

The truth is that yes there are still a lot of homes that will sell under some sort of distress sale category and that will continue to depress the market some.

The other part is that Socal still needs more Single family homes, and any decent home at a decent price will get bought almost as soon as it hits the market in most of SD and TV anyway (maybe not some places like antelope Valley or whatever) and that will keep the market more or less level (or at least at about cost to produce) for a while yet.

But five or six years from now well you guess.

Link redo:

http://www.realtytrac.com/MapSearch/MapS...

No mystery, no urban myth. People are not paying their mortgage because they are crazy, rediculous, stupid underwater. This is accelerating and will continue. The most respected sources of data show a very, very bad situation that continues to grow but because the banks choose not to sell most of the REOs, people act as if the disaster is not happening.

Why so many can't look at the MLS and ALSO look at the foreclosure data is beyond me. It's as if they just can't believe that REOs would purposely not be listed on the MLS or for sale.

Banks must be falling over themselves patting each other on the back over thier seemingly impossible ability to convince people the problem is small by simply sitting on bad mortgages.

Another factor that deserves mention is that people may just be numb to bad figures. We have been reading the horrible numbers for a year now and the sky has not fallen. Each WEEK we get an unemployment report showing 500,000 jobs lost but it’s been going on so long no one pays attention.

14696 foreclosures in SD alone is cataclysmic, foretelling of impending disaster, yet it’s just another really big, really bad number that just does not get processed by number numb, bad news saturated minds.

Many have just decided that no matter how bad things get… things won’t really get that bad.
How else can 14696 distressed mortgages AND bidding wars exist in the same time frame and location?

As for the short-sale debate; in reality, Short-sales are simply REOs (future/shadow) coming to market. Rather than a sign the shadow inventory does not exist or will never flood the market the short sales ARE a form of the shadow hitting the market. If a bank sends out a NOD on a house then does nothing further for 18 months or even just 2 months, its part of the shadow inventory. After which, if the bank lists it for short sale then it is the definition of shadow inventory coming to market.

The bank lopping off 50% before or after the foreclosure process is 100% complete, matters little does it? When we see the flood, short-sales will of course be part of it.

Or to put this another way,

For single Family homes in most of Socal, there is enough pent up demand (at the right price = mortgage at about cost to rent) ,

That IMO it almost does not matter how many homes go into foreclosure, they will be bought up almost as fast as they hit the market,

Just think about TV, about a year and a half ago, it just seemed overwhelming there were so many foreclosures , I mean the place was just flooded with them, but most got bought up a lot quicker than many expected.

Just something to think about.

I remember an article from a well known business magazine at that time that was saying Murrieta was number one city in the nation in home resale’s due to foreclosure sales, Temecula was number three.

And these are not really that big of cities .

Short sales arent shadow inventory when they are on the market. As for the most respected sources of inventory, they are all crap as far as I can tell. Realtytrac way over reports in SD. I look at their data and see a very high percentage that have already been resolved.

I have no rose colored glasses nor am I a NAR pimp. I have real feet on the street and see what goes on daily. Banks rarely file NOD's (that i have seen) and let them sit for 18 months. Once its filed they are moving on it and only stop if there is a loan mod, short sale or legal action in process.

The pain is in the areas where people cant afford in lower income areas while the stable established neighborhoods are looking very strong. For example, in my neighborhood of 1100 homes there is exactly 1 on the market. That is 0.1%. The vast majority in the nicer parts of the county can afford their homes. Sure there will be exceptions but they are exactly that...exceptions. Ironically, I just got an offer on a short sale listing for a condo I have in Central San Diego. Turns out it came from someone who lives 2 blocks away from me. The condo is about 180K. They sent proof of funds via a money market statement with $500K in it.

People wonder who can afford Carmel Valley prices. I just picked up the local CV paper and was reading about their Pop Warner league. The 3 teams there are coached by Rick Mirer, Andre Reed and Duane Bickett. Just an anecdote but thats an example of who lives down there.

I'm not saying we are booming or even turning around but time and again your doomsday prognostications have fallen flat . I find it charming that you pop up trying to mock me time and again while I have a well documented track record of public predictions that have been spot on over the last 3 years based upon my man in the street perspective. In contrast you have a public track record of demennted musings......

This makes a lot of sense and haven't really heard this theory before. At the end of the day, a lot of people just want to go on living their life as they have. If they can fake it by "forgetting" about the 2nd, that certainly helps. Certainly helps the rent/buy math and you gotta pay to live somewhere.