This is my first post so I’ll briefly introduce myself. Most of my career was spent in residential contracting as both a new home builder and a remodeler. I’ve rehabbed and flipped houses and I still own a duplex I plan to keep. My plan is to buy more houses this year. I retired from contracting a few years ago and decided to pursue real estate full time. I’m a licensed Realtor.
Here’s my question. In my market, the Twin cities metro in Minnesota, we have seen the inventory of bank owned and short sales shrink considerably in the last few months. Priced seem stable to slightly higher for distressed houses.
Are the people seeing Bank owned and short sale inventory shrinking in other parts of the country?
Take care,
Bob
Hi Bob,
There was a moratorium on foreclosure from the end of last October through the end of April.
We have seen a bubble appear looking like fewer homes are available, however we feel the inventory will not shrink back to normal levels until next summer or fall (2010).
I am in the south west! (Nevada, California, Arizona)
Phoenix Arizona still has about 40,000 more listings than normal levels three years ago.
I’m aware of the moratorium. There are also new incentives for banks to do short sales. Some are predicting a new wave of foreclosures later this year and in2010.
Our overall MLS inventory is much smaller than yours. Right now it’s around 26,000 vs 44000 when inventory peaked in 07. I’m not sure what ‘normal’ is anymore. Bank mediated sales still dominate the market here, but not like 3-6 months ago.
Bob
Like Gold River said, Arizona’s market is still dominated by distressed properties which is the difference between the peak in '07. Inventories in '07 had only a small percentage of REO’s.
Although, in recent months, REO supplies have tempered a bit, it is due to the moratorium since they did not take back very many properites in the last quarter of '08 thru 1st quarter '09 as compared to previous months. This will change in the later half of this year and continue through 2010.
My prediction is that banks, due to the eventual rise in REO inventories, will be working hard to complete loan modifications and short sales for the next two years. All this will not prevent a record rise in number of REO banks will need to deal with.
Since there are still many people walking away, the banks will already be taking REO’s in record numbers so it is inevitable that prices will remain low or will decline as these properties are released into the markets.
Moreover, prices in most markets will be under pressure since there are a lot of people who have pulled their homes off the markets whenthey were unable to get their price. These homeowners, many of whom are investors, will again market their homes at the first sign of a price increase.
Supply is going to be high for several years to come and I have an outlook horizon somewhere between 5 to 7 years before we cycle through most of this inventory and new (distressed) invemtories yet to be realized.