Real Estate. Economics. Business
Check out the latest from the Minneapolis Area Association of Realtors with regard to Foreclosures and Short Sales in the Twin Cities. The big take aways are that inventory is falling in all segments – traditional sellers, foreclosures, and short sales.
The foreclosure business appears to be drying up. According to Housing Wire, there were 205,000 foreclosure filings in the month of December 2011. That’s the lowest monthly total since November 2007 and for the year 2011 was 35% lower than 2010.
Given the political football that foreclosures have become, it’s is difficult to know if this is a real slow down in foreclosures or if it’s just that the banks have slowed down the processing.
I guess I didn’t realize that Rick Sharga left RealtyTrac for Carrington Mortgage Holdings. Rick was always the public face every month when RealtyTrac published its latest foreclosure data. The fact that he has left for greener pastures is interesting. Carrington Holdings deals in part in the distressed mortgage business. There is real money to be made there.
From the Housing Wire story:
[[Update 1: Corrects delinquent loan figure and date that market expected to bottom out]]
The U.S. housing market will hit bottom this year and remain flat until 2014, when it will start to slowly recover, said Rick Sharga, an executive vice president with Carrington Mortgage Holdings.
“We’re looking at a catfish recovery,” he told attendees at the Asian Real Estate Association of America conference in San Francisco Friday, saying the market will bump along the bottom for some time before starting to revive.
More than a million foreclosure actions that should have taken place this year have not yet moved forward, and that delay pushes a resolution of the housing market’s problems into next year and beyond, he said, citing data from RealtyTrac, where Sharga served as a senior vice president until this week.
The bottom in the housing market has been called so many times, it’s hard to keep track. Are we at the bottom? Possibly. If we can get job growth back the bottom will be in. If we don’t get any job growth, we will likely continue to drift slightly lower for the next several years.
Standard & Poor’s is out with some new analysis regarding the shadow inventory levels of housing in the U.S. The shadow inventory is often considered that inventory that either the banks are sitting on or are in some state of foreclosure and will be coming on the market in future months and years.
According to this Housing Wire story, shadow inventory is down to about 40 months now based upon present liquidation rates…I love that…liquidation rates. I guess that’s how the banks look at real estate these days and that would make sense with all that’s going on. However, these items being liquidated are peoples’ homes.
Below is the graphic produced by Standard & Poor’s based upon CoreLogic’s data. (Click to enlarge image).
Standard & Poor's Shadow Inventory 8-17-2011
It will be interesting to see if this is the big, permanent turn in the shadow inventory or if it will start to rise again as the economy slows. We won’t know for 6-12 months unfortunately because of the way the data flows.
There has been lots of press lately about the declining inventory of bank owned property as well as notices of foreclosure across the country as well as in the Twin Cities. Banks have absolutely driven the market the past 3 years but perhaps that tide is about to change. If inventory is any judge, that may be the case.
I just looked at the bank owned inventory in Plymouth, MN and all I can say is it’s dreadful! There are only 18 properties currently for sale. 2 of them are under contract right now. A total of 10 are single family homes and 8 are townhomes/condos. None of them are over $300,000 with the exception that one of them is an auction property that should sell for well over $300,000 when it’s finally auctioned. (The last purchase on it was a few years ago for over $900,000).
If you’d like this search that I just ran, please send me an e-mail and I’ll forward it to you on e-mail. Otherwise, I’ve set up a custom search for Plymouth bank owned properties.
The federal government has a program called Home Affordable Modification Program where they encourage the large banks to offer loan modifications and sometimes wipe away the second mortgages on property. The Treasury department is offering another $4.7 billion to help with the program. According to this Housing Wire story, $27 billion has already been contributed from taxpayers to homeowners and bankers. Remember, this programs don’t just benefit homeowners…the bankers are benefiting financially as well.
The banks are killing the housing market with short sales. You think that’s hyperbole? Talk with an agent you know. Very few of these are getting done despite what you’re hearing from the banks. There is a massive backlog of short sales for sale and they take forever to get completed if you can get them done.
How are they killing the market? I was speaking with a fellow agent today at a training and I mentioned I don’t know why we don’t just “pend” short sale properties once we get a contract on them. He reminded me that the reason we don’t is so we can show the bank that we’ve listed it for sale and that it continues to be for sale and the offer that we’ve submitted is the best and only one. The truth of the matter is once it has a contract on it and is now “sold subject to bank approval or third party approval” very few people come in and show the property. Additionally, even if we miraculously got another contract, we couldn’t do anything with it anyway. The seller, by signing the first contract, has sold the house – just subject to bank approval on the short sale. It’s an absolute waste that that home continues to stay on the market. The Realtors and the MLSes are complicit in allowing this to happen in Minnesota.
So here’s what happens, it takes about 225 days on average to pend a short sale if you can get it done. It’s taking about 140 days to pend a traditional seller’s property. Those for sale signs on the short sales continue to hang around forever. There is also a false impression left in buyers minds about how many properties are for sale when they look are various web sites. I can tell you more often than not when I get a request from a potential buyer to see a property that looks like a great value, often times it’s already under contract. However, it’s showing up as active and adding days on market to the overall market stats hurting traditional home sellers.
Short sales are the poison pill for the housing market. It’s time for the banks, Realtors and MLSes to get their acts together and stop this ridiculous practice that is hurting many of the people across the county.
Here’s a link to the Twin Cities Foreclosure and Short Sales Report.
The Minneapolis Area Association of Realtors has as survey asking its members to complete a survey on the City of Brooklyn Park, MN’s Point of Sale Inspection Program which is expected to sunset in 2012. This program was put in place at the beginning of the housing crash. Brooklyn Park has been particularly hard hit with foreclosures.
The biggest issue I have with it is the inspection costs $200 and when it comes to foreclosures, the buyers often have to open an escrow account with the city for $200 and then set aside 1.5x the estimated repairs for the hazardous items. It’s a waste in my opinion. Those investors are going to fix the home anyway. However, if Brooklyn Park sells perhaps 600 foreclosures this year, that generates $120,000 just to open all of those escrow accounts. That’s money from the buyers.
Other than that, I think the City of Brooklyn Park does a nice job with their Point of Sale Inspections. The inspectors are great and I have never had any problem with them.
BTW, here’s a link to the latest housing stats for Brooklyn Park, MN.
