RE shadow inventory???

User Forum Topic
Submitted by phaster on June 3, 2017 - 8:45am

had an interesting RE conversation last week and thought I'd ask if anyone has heard this...

basically from what I gathered stuff like RE “shadow inventory” was placed into something called "special purpose entities" (SPEs)

the magnitude of toxic stuff which is “off balance sheet” at the national level is unknown because its juggled kinda like overnight commercial paper

since SPEs are traded and not “held” for very long, the property is not recorded at county recorders office level (thus RE turns into “shadow inventory”)???

I'm guessing this same idea is playing out in the international markets (in other words markets like china), where their central banks have set up a similar liquidity trap (in an effort to boost their own domestic economy)

https://www.stlouisfed.org/publications/...

so money flows into RE which acts as a store of value BUT everyone sees how overpriced their own market is AND reason the grass is always greener someplace else.... So rich people from china buy real estate as a hedge in the USA, then rich people in the USA buy real estate in Mexico as a hedge, etc., etc., etc.

bottom line w/ global markets and money knowing no borders, there are still lots of unknown risks (knock on effects) from “shadow inventory,” derivatives, swaps, mismanaged stuff like pensions

https://piggington.com/poverty_politics_...

etc...

Submitted by flu on June 3, 2017 - 12:56pm.

Lol... First your analysis on peak oil. And then your analysis of public pension. And now your analysis on shadow inventory.

Did you find a unicorn in the forest yet?

Submitted by WarChestSM on June 3, 2017 - 1:16pm.

I actually think there is a lot of shadow inventory but in a different way. Around my area in Los Angeles there is extremely limited inventory, yet I keep seeing houses come up for rent. I feel like everyone got the memo on "low inventory equals higher prices", and thus people are on the margin hanging onto properties and renting them out instead of selling them in hopes of even bigger gains over time...Softer rental prices or much higher interest rates probably would change things but both of those seem to be happening very slowly so far.

Submitted by phaster on June 8, 2017 - 4:57pm.

flu wrote:

Lol... First your analysis on peak oil. And then your analysis of public pension. And now your analysis on shadow inventory.

Did you find a unicorn in the forest yet?

nope, no unicorn just some self aggrandizing, special needs troll

PS FWIW

flu wrote:

July 17, 2016 - 10:14pm

Man, remind me never to hang out with folks like you. It's not that I don't value actual insight, positive or negative. I do. It's just I don't understand some of you that are so fixated with your beliefs that you can't really think objectively in the only thing that matters.... "How can I make money?"

https://piggington.com/investing_municip...

phaster wrote:

September 22, 2016 - 9:29pm
flu wrote:

Hey look, I can google things and cut, copy, and paste too. Because you know if you read it on the internet, it must be true!

WOW, so that's what you look like...

I never considered "if you read it on the internet, it must be true!"

huh, what a concept take things at face value and disregard all ideas about applying the scientific method to verify if what is stated (on the web) has any merit

truth be told, over the years I've come across several opportunities to make "easy" money, like an offer of 5k from from some guy on facebook

thinking back, could have then used that as seed money to make even more money by taking advantage of a deal eMailed to me by some guy in nigeria

it all makes sense now, why go to university to learn something useless like math or try and think things out, when as you said the only thing that matters is making money and the way to make a personal fortune starts by using other peoples money then blindly follow various inner-tube schemes... then brag about being a financial genius just like trump (end sarcasm)

https://www.washingtonpost.com/news/post...

https://piggington.com/ot_bearishgurl_sh...

flu wrote:

June 2, 2017 - 11:48am

my brokerage account, which I use to actively trade some stocks thinking it *might* beat the market, is down $1000.. Fortunately, it's only $170k in that account....I would like to think my stock picking skills can consistently beat the markets, but they can't....

Sure glad I don't even try to put all my eggs in that account thinking I'm smarter than the markets all the time.

https://piggington.com/ot_stocks_today?p...

admitting problems is a good first step...

https://piggington.com/ot_dontfeedthetro...

Submitted by phaster on June 8, 2017 - 4:58pm.

opps, dup

Submitted by phaster on June 8, 2017 - 5:26pm.

WarChestSM wrote:
I actually think there is a lot of shadow inventory but in a different way. Around my area in Los Angeles there is extremely limited inventory, yet I keep seeing houses come up for rent. I feel like everyone got the memo on "low inventory equals higher prices", and thus people are on the margin hanging onto properties and renting them out instead of selling them in hopes of even bigger gains over time...Softer rental prices or much higher interest rates probably would change things but both of those seem to be happening very slowly so far.

shadow inventory isn't applicable to hot RE areas like san diego, but was trying to get a feel for the mechanism by which its possible to hide stuff (off balance sheet)

I've read right after the 2007/2008 crash lots of hedge funds bought up RE

https://newrepublic.com/article/112395/w...

and most likely that is where some of the "shadow inventory" made its way back into the real world

users of this board aren't into all the exotic "investments" (nor am I for that matter) but just thought I'd ask anyway because wonder if the same mechanism as I was told was used to juggle RE (off balance sheet) would work for various toxic assets in the international markets (i.e. off balance bank balance sheets for deutsche bank, etc.)

Submitted by flu on June 8, 2017 - 5:38pm.

Quote:
admitting problems is a good first step...
https://piggington.com/ot_dontfeedthetro...

Says someone with a drug problem...lol

I am doing great financially. Thanks for asking. At least I don't need to live off of the real estate inherited from my parents and waste most of my life blogging, unlike...you...lol...

Stay off the drugs...

Submitted by moneymaker on June 9, 2017 - 8:47am.

I'm guessing that a house will on average spend more time in escrow than on the market, so signs are up in front of houses for twice the amount of time of inventory. I.E- listed for 40 days, in escrow for 60 days = 100 days sign in front yard. Then there are the houses that never have a sign up and those are the ones I'm wondering about, those are usually the "steals" as far as value. Are there houses that sell without making it to the MLS? Are they in the charts? What is the shortest escrow anyone has ever heard of?

Submitted by phaster on June 14, 2017 - 8:03am.

flu wrote:
Quote:
admitting problems is a good first step...
https://piggington.com/ot_dontfeedthetro...

Says someone with a drug problem...lol

I am doing great financially. Thanks for asking. At least I don't need to live off of the real estate inherited from my parents and waste most of my life blogging, unlike...you...lol...

Stay off the drugs...

that's pathetic,...

https://piggington.com/ot_dontfeedthetro...

troll b gon

Submitted by phaster on June 14, 2017 - 8:08am.

moneymaker wrote:
I'm guessing that a house will on average spend more time in escrow than on the market, so signs are up in front of houses for twice the amount of time of inventory. I.E- listed for 40 days, in escrow for 60 days = 100 days sign in front yard. Then there are the houses that never have a sign up and those are the ones I'm wondering about, those are usually the "steals" as far as value. Are there houses that sell without making it to the MLS? Are they in the charts? What is the shortest escrow anyone has ever heard of?

fastest closing time for escrow or any close of escrow for that matter only measures the end buyer (or tip of the ice berg so to speak)

consider its SOP for (too big to fail) banks to move assets off-balance sheet and link them to the capital markets via "special purpose entities" (SPEs), BUT when needed to take them back onto their balance sheets when perceptions of risk changed abruptly in the market

if the problem is to really understand what's really going on in just the RE sector of the economy for example, the task requires to somehow collate all change of property ownership records in all the county recorders offices and see what private party or bank(s) has ownership at regular intervals, to look at time series trends (that's loads of data that isn't easily gathered) THEN cross reference the RE w/ various loan docs to make sure a property isn't "cross-collateralization"

so,... any realistic model of the economy w/ RE shadow inventory, the shadow banking system (i.e. hedge funds, and other non bank entities that invest in RE), etc., one would need to build a "deep thought" computer (akin to the one in hitch hikers guide to the galaxy)

wish I had a copy of the booz allen hamilton white paper,... where (one of individuals who worked on it and told me) they came to the conclusion its an impossible task,... think it would be an interesting read

Submitted by urbanrealtor on June 21, 2017 - 9:38pm.

phaster wrote:
moneymaker wrote:
I'm guessing that a house will on average spend more time in escrow than on the market, so signs are up in front of houses for twice the amount of time of inventory. I.E- listed for 40 days, in escrow for 60 days = 100 days sign in front yard. Then there are the houses that never have a sign up and those are the ones I'm wondering about, those are usually the "steals" as far as value. Are there houses that sell without making it to the MLS? Are they in the charts? What is the shortest escrow anyone has ever heard of?

fastest closing time for escrow or any close of escrow for that matter only measures the end buyer (or tip of the ice berg so to speak)

consider its SOP for (too big to fail) banks to move assets off-balance sheet and link them to the capital markets via "special purpose entities" (SPEs), BUT when needed to take them back onto their balance sheets when perceptions of risk changed abruptly in the market

if the problem is to really understand what's really going on in just the RE sector of the economy for example, the task requires to somehow collate all change of property ownership records in all the county recorders offices and see what private party or bank(s) has ownership at regular intervals, to look at time series trends (that's loads of data that isn't easily gathered) THEN cross reference the RE w/ various loan docs to make sure a property isn't "cross-collateralization"

so,... any realistic model of the economy w/ RE shadow inventory, the shadow banking system (i.e. hedge funds, and other non bank entities that invest in RE), etc., one would need to build a "deep thought" computer (akin to the one in hitch hikers guide to the galaxy)

wish I had a copy of the booz allen hamilton white paper,... where (one of individuals who worked on it and told me) they came to the conclusion its an impossible task,... think it would be an interesting read

I am open to changing my mind on this but I am going to have to call bullshit until seeing evidence here.
Do you have an inside line or just suspicion?
I do a lot of deep dives and have not encountered this.
I spend a lot of time combing property records.
Again, I am open to new data on this.

Submitted by phaster on June 22, 2017 - 8:37am.

urbanrealtor wrote:
phaster wrote:
moneymaker wrote:
I'm guessing that a house will on average spend more time in escrow than on the market, so signs are up in front of houses for twice the amount of time of inventory. I.E- listed for 40 days, in escrow for 60 days = 100 days sign in front yard. Then there are the houses that never have a sign up and those are the ones I'm wondering about, those are usually the "steals" as far as value. Are there houses that sell without making it to the MLS? Are they in the charts? What is the shortest escrow anyone has ever heard of?

fastest closing time for escrow or any close of escrow for that matter only measures the end buyer (or tip of the ice berg so to speak)

consider its SOP for (too big to fail) banks to move assets off-balance sheet and link them to the capital markets via "special purpose entities" (SPEs), BUT when needed to take them back onto their balance sheets when perceptions of risk changed abruptly in the market

if the problem is to really understand what's really going on in just the RE sector of the economy for example, the task requires to somehow collate all change of property ownership records in all the county recorders offices and see what private party or bank(s) has ownership at regular intervals, to look at time series trends (that's loads of data that isn't easily gathered) THEN cross reference the RE w/ various loan docs to make sure a property isn't "cross-collateralization"

so,... any realistic model of the economy w/ RE shadow inventory, the shadow banking system (i.e. hedge funds, and other non bank entities that invest in RE), etc., one would need to build a "deep thought" computer (akin to the one in hitch hikers guide to the galaxy)

wish I had a copy of the booz allen hamilton white paper,... where (one of individuals who worked on it and told me) they came to the conclusion its an impossible task,... think it would be an interesting read

I am open to changing my mind on this but I am going to have to call bullshit until seeing evidence here.
Do you have an inside line or just suspicion?
I do a lot of deep dives and have not encountered this.
I spend a lot of time combing property records.
Again, I am open to new data on this.

as I posted this topic came up in a discussion and its pretty far out there I'll be the first to admit that...

BUT SPEs (Special Purpose Entities) are indeed vary real

https://www.wsj.com/articles/SB101432945...

http://www.bis.org/press/p090929.htm

https://www.pwc.com/gx/en/banking-capita...

http://www.hjlawfirm.com/blog/202-what-i...

and I was just posting what I had heard in the hopes of getting confirmation WRT RE

talked to a friend of a friend who works on bonds and confirmed that SPEs were used just like creation and annihilation operators (in math/physics) to tweak those kinds of financial vehicles on a banks balance sheet

don't know what else to say, other than still seeking answers to lots of interesting questions

Submitted by SK in CV on June 22, 2017 - 9:30am.

phaster wrote:

as I posted this topic came up in a discussion and its pretty far out there I'll be the first to admit that...

BUT SPEs (Special Purpose Entities) are indeed vary real

https://www.wsj.com/articles/SB101432945...

http://www.bis.org/press/p090929.htm

https://www.pwc.com/gx/en/banking-capita...

http://www.hjlawfirm.com/blog/202-what-i...

and I was just posting what I had heard in the hopes of getting confirmation WRT RE

talked to a friend of a friend who works on bonds and confirmed that SPEs were used just like creation and annihilation operators (in math/physics) to tweak those kinds of financial vehicles on a banks balance sheet

don't know what else to say, other than still seeking answers to lots of interesting questions

SPE's exist. They are not proof, in fact, they're not even evidence of any shadow inventory. They don't get assets (or liabilities) of any banks' balance sheet. Shadow inventory was a myth 8 years ago. It was a myth 6 years ago. It was a myth 4 years ago. It is still a myth.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.