From Core Logic:
- As of April 2012, shadow inventory fell to 1.5 million units, or four-month’ supply and represented just over half of the 2.8 million properties currently seriously delinquent, in foreclosure or REO.
- The four-month’ supply of shadow inventory is at its lowest level in nearly three years. It parallels the unsold months’ supply of non-distressed active listings that hit a more than five-year low in April, falling to a 6.5-months’ from a 9.1-months’ supply just a year ago.
- Of the 1.5 million properties currently in the shadow inventory, 720,000 units are seriously delinquent (two months’ supply), 410,000 are in some stage of foreclosure (1.1-months’ supply) and 390,000 are already in REO (1.1-months’ supply).
- The dollar volume of shadow inventory was $246 billion as of April 2012, down from $270 billion a year ago and a three-year low.
- Serious delinquencies, which are the main driver of the shadow inventory, declined the most in Arizona (-37.0 percent), California (-28.0 percent), Nevada (-27.4 percent), Michigan (-23.7 percent) and Minnesota (-18.1 percent).
- .......
- It is important to note that the CoreLogic numbers exclude homes that are already listed in the market - it only shows the "shadow" (unlisted) inventory. That means that the overall inventory of distressed homes is far greater than the chart above shows (maybe 2 to 2.5 times that number).
Two key components are impacting the decline in shadow inventory:
1. A smaller portion of loan delinquencies now results in a sale due to the various loan restructuring programs and
2. the inventory has been hitting the market much faster than people anticipated.
Monday, July 9, 2012
Shadow Inventory Shrinking Quickly
From Sober Look At the Markets:
Subscribe to:
Post Comments (Atom)
3 comments:
Its shows that the increasing is very much impressive, but how do you calculate the inventory, is their any software you are using?Like I am using a bar inventory software and which is very helpful. if you are interested then you will visit www.bar-i.com
A large percentage of homes sold over the past years have been to cash buyers. A large percentage of those cash buyers have been buying these homes as investments, not to live in as a primary residence. OVer the next years we'll see most these homes hit the market again For Sale. This is not taken into account in these numbers. Nor are the large number of folks underwater in their homes which would like to sell but can't (and won't do a short sale).
Some of these cash buyers did not really use cold hard cash, but borrowed using a different property as collateral. These investors are collecting crummy rentals, sometimes by the dozens. Other cash buyers are looking for somewhere, anywhere, to put the cold hard cash they took out of stocks and bonds.
In my town, both groups are bidding up the fixers to the point that once they repair the house, the total invested is more than the house is worth. These houses are already starting to come back on the market,and they'll be lucky if they recover their principal. I am looking at one that was purchased at a fixer 3 years ago for $340,000 and now the buyer is asking $500,000.
Someone who just wants to buy a family home is shut out. Such a person may not have other property to borrow against. If the house is such that no lender will lend on it, then the buyer needs 100% cash, not 20%. The home-buyer cannot compete,and can only continually to rent at outrageous prices, further eroding the ability to buy.
In my town the cheapest fixer (basically a tear-down) just went for $250,000, although buyer's agents priced it at $180,000. Half the funds to fix it was lost to acquisition. The buyer likely will do only cosmetic fixes and put it out as yet another crummy, over-priced rental. Pretty soon the buyer will tire of being a landlord and put the house back on the market.
As long as this unhealthy cycle continues, the housing market cannot be viewed as "recovering" or "healthy." It is still sick regardless of statistics.
Post a Comment