Lenders' shadow inventory is real- and worse than you thought

Foreclosures
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Lenders' shadow inventory is real- and worse than you thought

Rich Weese
Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes

3 years for banks in NV and CA to foreclose on current delinquent loans. Which state will take over FIFTY (50) years at current rate? I said OVER 50!

http://www.msnbc.msn.com/id/43456544/ns/business-us_business

Looks like there will be properties still to buy when our kids and grand kids are adults! What do you think? Rich

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Mark UpdegraffBusiness Member
Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 696 votes
15y

Glad to hear from you Rich!  I really hope things don't take 50 years here in NYS!  The foreclosure I picked up took about 3 years to get through.  In that time it was vandalized, copper stolen, broken windows, water damage.  A prostitute was taking advantage of it.... It did lots to keep the neighborhood down.  I can't imagine any investor wanting an "asset" that has been deferred for that amount of time.  Not to mention it will blight neighborhoods into a state of near impossible recovery.  It is a sad state of affairs... Another great example of bureaucracy's noble yet failed attempt to help.  

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  • Mark UpdegraffBusiness Member
    Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 696 votes
    15y

    Glad to hear from you Rich!  I really hope things don't take 50 years here in NYS!  The foreclosure I picked up took about 3 years to get through.  In that time it was vandalized, copper stolen, broken windows, water damage.  A prostitute was taking advantage of it.... It did lots to keep the neighborhood down.  I can't imagine any investor wanting an "asset" that has been deferred for that amount of time.  Not to mention it will blight neighborhoods into a state of near impossible recovery.  It is a sad state of affairs... Another great example of bureaucracy's noble yet failed attempt to help.  

    Podcast Guest on Show #112
    Updegraff Group Realty4.746 Reviews
    WebsiteView Page
    1Reply
  • Mitch Kronowit
    SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
    15y

    If we look at all these homes sitting in the "shadows", many are vacant, many are still occupied. The question that comes to mind is where did all the people from the vacant homes go and where will the people in the occupied homes go?

    Of course, many become renters, but they still need a place to rent! Others move in with family or friends and otherwise consolidate households. The point is, all those shadow homes have/had occupants at one time and notwithstanding several mass-grave discoveries on the horizon, all those people are still around. I believe once the economy recovers and unemployment drops, FOR REAL, demand for housing will absorb this inventory almost as fast as it was created.

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  • Chris G.
    Real Estate Investor · Irvine, CA · Member since 2011 · 189 posts · 33 votes
    15y

    Yes, but it will become a case of lack of supply and too high of demand, as the houses won't be able to come on the market quickly enough due to the lag at the courthouses (which is what the article is saying will take so long).
    So then we may see a boom in new home building, with still a ton of old foreclosures sitting on the banks' books.

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  • Mitch Kronowit
    SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
    15y
    Originally posted by Fantasm:
    So then we may see a boom in new home building, with still a ton of old foreclosures sitting on the banks' books.

    Building permit issuances in Orange County this year are already double what they were for 2010. There are 28, count 'em, 28 housing developments under construction right now in Orange County. 10 of those are in Irvine alone.

    The "big" money (not necessarily the "smart" money) is banking on a housing recovery beginning in 2012. Several big players bought up large parcels of land in California in 2010.

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  • Rich Weese
    OP
    Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
    15y

    Thanks Mark. That is why I don't want to buy in big cities.

    Mitch- You hit on several of the reasons.Also, people are still reaching the housing age, and population is increasing and living longer every year.

    Fantasm- That is why the rents are projected to rise substantially in the near future.I have a small (64 unit) subdivision in so TX. I just started 2 new, unsold specs as I hope to be a little ahead of the curve on new const you suggest.

    Mitch-I can't imagine Irvine being a good area to buy homes for long term hold. Remember, I made my big money in Orange County, so I know it fairly well. I'm just not a buyer for that area. High median income (as on Shark Tank)I'm out. Rich

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  • Mitch Kronowit
    SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
    15y
    Originally posted by Rich Weese:
    Mitch-I can't imagine Irvine being a good area to buy homes for long term hold. Remember, I made my big money in Orange County, so I know it fairly well. I'm just not a buyer for that area.

    No, these new homes do NOT make attractive rental properties for investors. They are FAR too expensive. Heck, in Orange County, most USED homes are too expensive for rentals. But that wasn't my point. All this recent building is a leading indicator that developers are anticipating a housing recovery sooner, not later, than all the pundits would allow.

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  • Roger Rouse
    Brookfield, WI · Member since 2011 · 31 posts · 18 votes
    15y

    Even here in Milwaukee, which was never a high-flying real estate market, the shadow inventory is quite large. We are currently managing over 50 single-family homes for people who tried to sell, but gave up.

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  • Cheryl C.
    Investor · Reston, VA · Member since 2011 · 683 posts · 191 votes
    15y

    Roger, that is not too surprising seeing how very high your unemployment rate is compared to the 50 largest cities. Are you still the second worst?

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  • Patrick Jorgensen
    Residential Real Estate Agent · Phoenix, AZ · Member since 2011 · 17 posts · 0 votes
    15y

    You all make valid points, and we all know that there is "shadow inventory" out there. But isn't mostly located in non deed of trust states? Here in AZ they seem to have it pretty well dialed in. Our foreclosure process is 90 days so we are seeing these properties get back on the market fairly quickly. We have already seen a drastic drop in inventory here in the last quarter.

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  • Michael Zuber
    Real Estate Investor · Fresno, CA · Member since 2009 · 105 posts · 71 votes
    15y

    Rich

    I saw the same article and my blood boiled!!! I was so upset I had to write the following Blog Post Yesterday

    Title: Some Articles Just TICK me off

    http://www.biggerpockets.com/blogs/788/blog_posts/16095-some-articles-just-tick-me-off-

    We need to stop the madness and if you can't or decide not to pay your mortgage you need to be out of the house inside of 6 months!!! What happened to clearing the inventory

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  • Cheryl C.
    Investor · Reston, VA · Member since 2011 · 683 posts · 191 votes
    15y

    In my County (Fairfax, VA), according to the tax records for bank-owned properties, we have about 3 wks of inventory. Granted, I don't know what is in the pipeline but this is far from horrifying. Non-judicial State.

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