bubbleinfo.com

How are short sales affecting the market?

This chart divides Actives by Pendings (A/P, our gauge of the relative ‘health’ of each market). We’ve seen in the past that a 2.00 reading seemed healthy, and 3.00 was tolerable. I included contingents in the Pending counts because now they are much more likely to stick, and if a buyer does cancel, it’ll be because they found a better one and replaced it.

The two columns on the right side of the chart show the number of short sales in each Pending count, and the total number of short sales closed last year in each town:

Oceanside and Vista are smoking red hot with 1.05 reading – they literally have almost as many pendings as actives. Why? Because sellers AND buyers AND agents have embraced short sales. Comparing the pending short-sale counts of current vs. last year, it looks like Oceanside and Vista will probably set new records this year – and received a lot of experience in 2011.

But in NSDCC (the last six categories), it appears that short sales are a relatively new concept – but coming on strong. The difference is capitulation – Oceanside and Vista sellers have conceded on price, and buyers are responding. As a result, the market is working.

We need some old fashioned market clearing in NSDCC, where it is stale and stagnant.

In the last six towns on the list, there are 1,086 detached homes for sale. Even with the dozens of “refreshed” re-lists in the new year, the average market time is 121 days – with 21% of them having been on the market for more than six months!

How many sellers are in the ‘pre-distressed’ stage, and are just testing the market today at higher pricing to see if they can get out with at least enough for a steak dinner?

There must be quite a few – what will be the effect when they finally cave?

Specifically, would it hurt the market if they lowered their price and entered short-sale status?

Based on areas that have already seen capitulation, it doesn’t look like it (capitulation = lenders and listing agents getting sellers off the fence, price-wise).

Oh but wait JtR, Oceanside and Vista is a whole different socioeconomic class; there aren’t that many rich people. OK, we’ll see, but when there are 18 offers submitted on a funky older house on a busy street in La Jolla, I’ll stick to my guns that there are plenty of buyers….waiting.

Short sales are the device being used to ensure a softer landing, and the lenders/servicers will control the pace as needed. But they would be smart to recognize that market clearing is working great where implemented!

From cnnmoney.com (seen at CR):

NEW YORK (CNNMoney) — Delinquent borrowers facing foreclosure are learning that they can stay in their homes for years, as long as they’re willing to put up a fight.

Among the tactics: Challenging the bank’s actions, waiting to file paperwork right up until the deadline, requesting the lender dig up original paperwork or, in some extreme cases, declaring bankruptcy.

Nationwide, the average time it takes to process a foreclosure — from the first missed payment to the final foreclosure auction — has climbed to 674 days from 253 days just four years ago, according to LPS Applied Analytics.

It takes much longer than that in Florida, where the process averages 1,027 days, nearly 3 years. In D.C., foreclosure averages 1,053 days and delinquent borrowers in New York often stay in their homes for an average of 906 days.

Because California is a trustee-sale state, the delays are shorter – only 11 months on average:

And while some borrowers are looking for ways to make good with lenders and get their homes back, many aren’t paying a dime. Nearly 40% of homeowners in default have not made a payment in at least two years, according to LPS.

Many of these homeowners are staying in their homes based on a technicality. There is rarely any dispute over whether or not they have stopped paying their mortgage, said David Dunn, a partner at law firm Hogan Lovells in New York, who represents banks and other financial institutions in foreclosure cases.

“In my experience, they never say, ‘I’m not delinquent’ or ‘I want to pay my bill but I’m confused over who to send it to,’ or ‘Oh my God, you mean I didn’t pay my mortgage?’ They’re not in technical default. They’re in default because they’re not paying,” he said.

Read the rest of this entry »

Hat tip to daytrip for sending this along, from the latimes.com:

Reporting from New York—Slips of paper are pasted to the broken door of the corner row house, violations for the garbage piled near the front steps. The stench of trash wafts up the dark interior stairway, where an ashtray filled with cigarette butts sits like an abandoned potted plant on the second-floor landing.

Nobody lives here, at least not officially.

But as you climb the narrow stairs to the top floor, a door opens into an airy apartment that is home to Tasha Glasgow, who is part of a largely invisible population of squatters occupying vacant homes across America. Given their clandestine lives, it’s impossible to say how many people are squatting in this country, but with more than 1.3 million homes in foreclosure and hundreds of thousands of people homeless, advocates say it’s safe to assume the number is growing.

“You have these abandoned dwellings that are sitting there vacant, sometimes for many months,” said Patrick Markee of the Coalition for the Homeless in New York, where shelters are reporting record numbers of residents. “It’s not an issue of whether squatting is right or wrong. The fact is that people are desperate for places to live, and they’re going to do what they need to do.”

Read the rest of this entry »

There were 127 SFRs on the A-list in North SD County Coastal last week; here are the results:

Scheduled NSDCC SFR Trustee sales, Nov 28th – Dec 2nd:

Only 28% of the properties on the auction list were trying to sell – the rest are either bucking for a loan mod, or going down with the ship – which category they’re in probably doesn’t matter much, because most will shake out over the next few years.

With only 6% actually losing their house (8 of 127), this will drag on a while. There are 355 SFRs on the auction list; the rolling gob of free-rent goo that, for the homeowners, feels like purgatory. Hopefully the servicers can speed it up for everyone’s sake!

We thought the August blip of increased NOD filings might be a one-time event, but it looks like the servicers are keeping up the pace.  Hopefully it’ll translate into more trustee sales:

Unfortunately, we know that a surge of NODs and about $4 will get you a cup of coffee, but at least the cancellations are moderating – though they are the dominant number:

More from C-L on the delinquent mortgages – can we work our way out of this?

We are hitting the peak months of resets/recasts, yet delinquencies are dropping? 

The banks/servicers must be working feverishly to reset/recast the expected $1.6 trillion in ARMs, or just not reporting lates?  When this is all done, will anyone be surprised that a whole lot of people got a whole lot of free rent?

(Click on this image to enlarge)

Thanks to SM for sending this in – click on image for clarity:

We tend to spend a lot of time on short sales and foreclosures, what percentage of the market are distressed sales in the North San Diego County Coastal region (La Jolla to Carlsbad)?

The REO and short-sale MLS detached listings that have closed escrow equal 19% of the overall market, year-to-date.

The 2011 year-to-date breakdown of closed sales, and avg. cost-per-sf:

Four out of five this year have been regular sales.

The cost-per-sf is also influenced by location – 64% of the SS/REO closings were in Carlsbad/Encinitas.

I think we’ll see an increase of short sales over the next 24 months, unless lenders dig in over SB 458 and reject more of them.  If they decide on a case-by-case basis, they’ll probably be inclined to deny those with bigger loan amounts, and take their chances that a collection agency will be able get more after the foreclosure than the a couple of thousand dollars they’d get out of a short-sale.

There are many different pieces to the puzzle, here are a few more.

Jiji has posted this thought a couple of times:

Housing is broken, Agents , insurance, remodelers , landscapers, finance, escrow, builders etc… the list goes on and on.  What must never be said,

YOU WILL NEVER HAVE AN ECONOMIC RECOVERY UNTIL THE MAJORITY OF UNDERWATER HOME OWNERS ARE NO LONGER UNDER WATER.

I’m not sure we’ll recover any of the old economy; instead those who are creative and desperate enough, will find a new way to get by.  It will need to be independent from housing, because once the underwaterness is resolved, those who are left probably aren’t going to be moving much either.

Here’s why:

1. UP OR DOWN-SIZING – Price-wise, to move up or down, you need to change by 50% or more to make it worth it. 

It doesn’t make sense to sell for $600,000, and buy for $750,000 – you don’t get enough extra house to make it worth it, and the closing costs are prohibitive.  But even if the costs got down to 1-2%, very few homeowners need a slightly-bigger house.  Don’t be surprised if you see in the future a JtR-supported remodeling enterprise to assist those who just need an extra bedroom or two.

2.  DOWN-DOLLARING - Sellers who want/need to bank some real money will have to leave town.

Those hoping to cash-out will need to leave town, and possibly the state, to net a few hundred thousand dollars.  How many homeowners are willing to leave?  Those buying now are here for the duration, so the down-dollarers who do leave are part of the cleansing.  How many weak hands are left?  Admittedly, it could be a large group, but they will likely hang on as long as possible.

3.  MORE RENTERS – There is going to be increasing pressure on rents.

Those in both the categories above who do sell, will try to stick around, and renting is a great temporary option.  For many it will be permanent, especially those who have family here because as they get older they aren’t going to leave town, just to buy a house.  Others moving here from out of town will prefer to rent, mostly because of the difficulty with buying smart.

Upward pressure on rents will impact the good-looking family homes in quality school districts.

4.  STAYING PUT - Baby boomers are prime candidates to be moving. 

According to Wiki, baby boomers control over 80% of personal financial assets and more than 50% of discretionary spending power.  Do they have one more move in them?  I don’t think so – after investigating the three categories above, many, if not most, will end up NOT moving, and make due with that to which they’ve become accustomed.

There will be great reluctance to selling from now on. 

Hopefully we’ve learned a big lesson in this downturn, and people will be more reluctant to load up on debt too. 

Which leaves just the out-of-towners, and first-timers, for homebuyers.

Those underwater are just part of the equation, and may just help with expediting the inevitable.

From HW:

Although the drop in default rates shows promise, the amount of shadow inventory still creates a dark loom over the future of housing prices, according to latest results from Standard & Poor’s U.S. Residential Performance Index.

The shadow inventory of unresolved distressed properties is currently at an estimated $405 billion, representation four years of housing inventory and one-third of the outstanding U.S. non-agency residential mortgage debt.

The report states that full recovery will only occur once the supply of distressed properties shrinks to less than a quarter of the current volume.

Additionally, the monthly liquidation and cure rates are at about 2.5%. This stems to an overall resolution rate of 5%, where these rates have lingered in the past nine months. (See chart below)

The slowing first default rates seen on the chart allows borrowers to resolve loans and clear out the inventory instead of defaulting and adding more, S&P said in the report.