I have heard the two best minds in the state of CA regarding the housing market, Bruce Norris of The Norris Group and Sean O’Toole of foreclosureradar.com speak in person. And they say there is no wave of REO’s coming (in California at least). The REO listing agents have actually laid off all their staff and many have changed careers because the banks are telling them there is NO inventory coming. Also, it’s a total myth that banks are “holding on to a ton of inventory”. Yes they are letting people squat in their homes for 3-4 years not making payments, but they are not physically holding on to inventory.
Another thing is with prices rising this year and next, it’s creating less underwater owners. And it’s creating a psychological change with owners. Home owners are now getting hope they may be able to sell some day without losing money, so they may decide to make their payments and keep their property. Rising prices creates a positive domino effect with less owners underwater + construction starting up and creating jobs.
I’m saying all this being a huge housing bear myself. Bruce Norris was the most famous housing bear in the state in 2005 writing reports and speaking throughout the state telling people to GET OUT of the market. He is a contrarian thinker. And he is predicting prices to rise very steadily in CA the next 3 yrs due to no relief in site for low inventory issues + low rates for the foreseeable future + boomerang buyers coming back in the market.
