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MMrenter
14 years ago

In less than 2 months, the
In less than 2 months, the number of listings on SDLookup in Mira Mesa has gone from 169 to 111. For low end listings, asking prices are really opening bids. Real bottom or false bottom, things have changed.

In these neighborhoods, almost every sale is either short or REO. Could the banks have figured out that they completely control the market right now? By sitting on foreclosures, they don’t have to account for losses (if I understand the mark-to-market change) and they protect the value of the properties they are selling. Maybe the banks are focusing on the short-term now and leaving the risks of increasing incentives to become delinquent to a later date and another CEO.

jpinpb
14 years ago
Reply to  MMrenter

There definitely is a lot of
There definitely is a lot of kicing-the-can down the road.

peterb
14 years ago
Reply to  jpinpb

I believe this is what Japan
I believe this is what Japan allowed their banks to do as well in the early 1990’s. They let them hide their worthless RE assets on the books without having to recognize them as such. The end result has been many, many years of stagnation, with the slow and steady decline in values.

jpinpb
14 years ago
Reply to  MMrenter

MMrenter wrote:In less than 2
[quote=MMrenter]In less than 2 months, the number of listings on SDLookup in Mira Mesa has gone from 169 to 111. For low end listings, asking prices are really opening bids. Real bottom or false bottom, things have changed.

In these neighborhoods, almost every sale is either short or REO. Could the banks have figured out that they completely control the market right now? By sitting on foreclosures, they don’t have to account for losses (if I understand the mark-to-market change) and they protect the value of the properties they are selling. Maybe the banks are focusing on the short-term now and leaving the risks of increasing incentives to become delinquent to a later date and another CEO.[/quote]

MM has something very strange going on. Their inventory is greatly reduced, yet so far this year there’s close to 170 NODs filed

I don’t monitor MM, but started to list the NODs for someone. I can’t tell you whether any of them are listed, pending, sold, short sale or squatting, but that’s a lot of distress in just a couple of months in one ZIP.

As I said, I’m not really tracking that area, but I’d keep an eye out on the ones from January. Very possible the banks will be scheduling foreclosures. I’ve noticed that on some of the ZIPs I’m tracking.

an
an
14 years ago
Reply to  jpinpb

jpinpb wrote:
MM has

[quote=jpinpb]

MM has something very strange going on. Their inventory is greatly reduced, yet so far this year there’s close to 170 NODs filed

I don’t monitor MM, but started to list the NODs for someone. I can’t tell you whether any of them are listed, pending, sold, short sale or squatting, but that’s a lot of distress in just a couple of months in one ZIP.

As I said, I’m not really tracking that area, but I’d keep an eye out on the ones from January. Very possible the banks will be scheduling foreclosures. I’ve noticed that on some of the ZIPs I’m tracking.
[/quote]
170 will hardly make big enough dent to completely change the current condition in Mira Mesa. If anything, it’ll make an extremely under supplied situation into a slightly under supplied situation. You’re still under supplied, even of all 170 goes listing tomorrow. For an area that have 74,222 people and 23,079 household, 170 is only 0.7% of total house hold. In March there were 51 closed sales and in April, there were 39 closed sales. Currently, per SD R’s post, there’s 67 pending right now. That’s between 2.5-4.3 months of supply. Current supply is between 1.6-2.7 months of supply. So, if we use 67 number, you’ll have a total of 4.1 months of supply and if you use 39 number, you’ll have 7 months of supply.

jpinpb
14 years ago
Reply to  an

That is, of course, also
That is, of course, also assuming that the NODs stop today. Over the past week, there were about 3 NODs a day.

an
an
14 years ago
Reply to  jpinpb

jpinpb wrote:That is, of
[quote=jpinpb]That is, of course, also assuming that the NODs stop today. Over the past week, there were about 3 NODs a day. [/quote]
Nope, not assuming that at all. At the current sales rate, even if all the NODs get to the market as REO, it still won’t push the supply number into the over supply territory.

NODs have been filed in MM for many months now. It didn’t just start now, yet months of supply is shrinking. How do you explain that?

jpinpb
14 years ago
Reply to  an

AN wrote:NODs have been filed
[quote=AN]NODs have been filed in MM for many months now. It didn’t just start now, yet months of supply is shrinking. How do you explain that?[/quote]

We have all been discussing that on this board and trying to figure out why they’re not to market. I did not post the NODs on SDL for MM from 2007 and 2008, but I assure you, I know there were an infinite supply as I scanned through the list. As I said, I don’t monitor MM. I couldnt’ take the time to list those.

The ZIPs that I do monitor, I can say this. I’m just now seeing some places that had NODs in 2008 be put on the market. It’s crazy. I made notes in the comments, like “finally” or “it’s about time” or “that took a while”

I cannot explain the delay. Everyone has their speculation or theories. MM is not the only place that has NODs that are backlogged. I won’t argue that some get redeemed, some get short sales, some get re-worked, some are just squatting and some are in limbo, twisting in the wind.

I can say this, a high percentage of the investment properties are more likely to get bank owned. As for the others, your guess is as good as anyone else’s.

an
an
14 years ago
Reply to  jpinpb

jpinpb, I do follow MM and I
jpinpb, I do follow MM and I can tell you, REO is the MARKET in MM for a while now. A lot of the REOs in MM are priced extremely well and get plenty of multiple offers and goes off the market w/in weeks, if not days. Most end up selling for above asking price. That’s how I explain the current supply situation.

jpinpb
14 years ago
Reply to  an

I thought we were questioning
I thought we were questioning the NODs that are twisting in the wind.

As I said, since I don’t follow MM and only go by what people say, MM has really seen declines enough that listings sell fast and above the low list, yet significantly less than peak. It still does not explain what’s happening w/the NODs.

an
an
14 years ago
Reply to  jpinpb

jpinpb wrote:I thought we
[quote=jpinpb]I thought we were questioning the NODs that are twisting in the wind.

As I said, since I don’t follow MM and only go by what people say, MM has really seen declines enough that listings sell fast and above the low list, yet significantly less than peak. It still does not explain what’s happening w/the NODs. [/quote]
That’s the key point, selling significantly less than peak. THE ONLY reason it’s selling fast now, is because people (general public) view them as reasonable price and are jumping en masses to bid up these properties. My interpretation from you posts is that you expect these NODs to change the market psychology in areas like Mira Mesa, and I just don’t think that’ll happen, unless we get 2x more NODs and they all become REO and hit the MLS soon.

jpinpb
14 years ago
Reply to  an

I would think the market
I would think the market psychology might change when we’re not in spring and if and when the NODs come to market. Are you calling bottom in MM? I am not arguing the present MLS inventory is low, but I just don’t want to negate the potential of future inventory.

an
an
14 years ago
Reply to  jpinpb

jpinpb wrote:I would think
[quote=jpinpb]I would think the market psychology might change when we’re not in spring and if and when the NODs come to market. Are you calling bottom in MM? I am not arguing the present MLS inventory is low, but I just don’t want to negate the potential of future inventory. [/quote]
No, I’m not calling bottom for MM. It’s too early to tell. If we go through 2 winters and the market condition gets worse (for us bears) compare to what it is today, then I’d call the bottom then. All I can do is state what I’m see at the moment. I’m also of the mindset of L shape recovery. Which means, even if we hit bottom today, 2-3 years from now, the nominal price will still be around the same.

Anonymous
Anonymous
14 years ago
Reply to  an

I occasionally lurk here and
I occasionally lurk here and haven’t been here in a while. If what I have to say has been discussed over and over, I’m sorry, I haven’t read all the posts.

I’m an REO agent out of L.A. county. The bump in pricing is a result of the foreclosure moratoriums that were put in place by various banks. This has resulted in a huge decrease of properties hitting the market and the inventory has been hit hard, resulting in multiple offers on anything decent.

The last of the moratoriums was lifted on April 30th and we are expected to see a big increase in inventory by the end of this month, building throughout the summer.

The moratoriums have been devestating to reo agents, as we have all been hiring any experienced reo staff we could get our hands on and then the business died out.

I don’t see an end to price depreciation for a few years at least.

carlsbadworker
14 years ago
Reply to  Anonymous

One question I have is how
One question I have is how much visibility does an REO agent have into the future? I mean if you guys didn’t successfully predict the moratorium last time, how did you know that you can predict correctly for the next few years?

Anonymous
Anonymous
14 years ago
Reply to  carlsbadworker

“One question I have is how
“One question I have is how much visibility does an REO agent have into the future? I mean if you guys didn’t successfully predict the moratorium last time, how did you know that you can predict correctly for the next few years?”

The moratorium caught everyone off guard for the simple reason it had never been done. Who would have thought the gov’t would intervene so dramatically?

As far as the market’s future, my opinion is based on the fact that there are tons of reo’s that havent hit yet that have already been taken back and there is even more in-process. HUGE numbers. The reos that have driven prices down so far are a fraction of what is still coming.

I worry that some other program will pop up that will freeze them again, but at some point the banks HAVE to sell the bad assets.

My opinion is the govt needed to stop the free fall for a while to get things moving again. I imagine when they hit again, the stock market will go back down, foreclosures will be the main story on the news, etc etc.

This is my opinion and it’s an opinion only:

The r.e. market is worse than you’ve heard any real estate ‘expert’ talk about. When the flood gates open, there will be way too much inventory and the prices will crash hard.

There will be a real
housing ‘crisis’ as the economy worsens, unemployment increases and the r.e. market is flooded with bank owned properties as the banks under-cut each other to get their properties off the market first.

A seldom talked about problem that I deal with on a weekly basis is the innocent tenant. I knock on the door to tell the occupant that the bank has taken the house back and find that the occupant is a renter that has been faithfully paying rent each month to the owner who is not paying the mortgage and all their money is tied up with their deposit, which they obviously will never get back. I think this is criminal and some sort of law should be enacted that would punish a landlord who continued to receive rent payments but are letting the property go into foreclosure.

These tenants also pose a big problem in the future and I always do my best to fight the banks to get them the most ‘Cash for Keys’ money that I can. The owner took on a bad investment, but the tenant pays for it.

Since the Fannie moratorium was lifted, we have seen an increase in BPO requests (broker price opinions, which is the start of the banks figuring out what a property is worth and what to do with it) by about 500%. These are the reos that will hit in the summer.

I work with about 10 banks and outsourcers and the consensus I’m getting from the asset mgrs I deal with is get ready – it’s going to get ugly.

peterb
14 years ago
Reply to  Anonymous

surfer00, thanks for your
surfer00, thanks for your insight. It’s what all of us here are forced to guess about as the govt’s intervention is creating dislocations that are of historic proportions.

Any BPO updates would be greatly appreciated as they’re the first step towards REO market release, as you’ve said.

carlsbadworker
14 years ago
Reply to  Anonymous

surfer00, thank you for your
surfer00, thank you for your insight. But I still want to debate on this. Yes, I too believe that “the reos that have driven prices down so far are a fraction of what is still coming”. But unless the unemployment condition severely deteriorates or the interest rate increases suddenly or the REOs hits the market at the same time. I still doubt the price implication of that inventory release.
Now, it is said that the median time an American homeowner changes his primary residence is 7 years. So for simplicity, there are 50% of the homeowners who bought in the last 7 years when the price is higher than the market place. A big portion of them wouldn’t go to REO but at the same time there’re a big portion of homeowner who bought at lower price but re-financed at the peak to use their homes as ATM. Assume these two evens out, so at the maximal I think 50% of the all housing units will have REO potential.
Now, let’s just take Temecula as an example since I’m more familiar with it. There’re roughly 20K housing units in Temecula Perhaps, 70% of them are houses instead of apartments. So we have 14K total inventory and 7K REO potential. The houses are selling at an annual rate of 3K here and assumes 70% of them are REO, that’s an annual rate of 2K. So the maths is that it will take 3.5 years for the REO potential be cleared and we are almost half way there end of this coming summer (assume the eager ones who bought early 2008 will be doing fine).
My point is: if the government (whether the federal or the state) can keep on pushing the moratorium, at times it may seem that they are only delaying the unevitable for 6 months out of the future. But given enough time, the end of the tunnel will be coming and I think that’s what the governments are hoping for with their moratorium programs.

Anonymous
Anonymous
14 years ago

I was wondering if you had
I was wondering if you had the raw data behind all the charts? If so, can you post it? thanks!