Hat tip to Tom for sending this along.
Sean at foreclosureradar.com has published his latest report:
With 90,365 properties in inventory, banks currently carry about 4.77 months of supply, however, it takes the banks on average 7.33 months to dispose of a bank owned home, thus current inventory is less than should be expected from normal operations given current foreclosure volumes. Bottom line – there is no “shadow” inventory of bank owned homes being intentionally withheld from the market.
The number of properties on the brink of foreclosure continues to increase and has more than doubled from a year ago. With a smaller percentage of scheduled foreclosures actually being sold due to postponements at trustee sale, while at the same time seeing strong sales of bank owned (REO) properties, banks have managed to reduce their inventory by 41.8 percent from a year earlier. With the banks reselling an average of 18,943 homes a month in the 3rd quarter, and an average time to resell of 7 months (given the time taken for eviction, repairs and resale), we believe there is essentially NO shadow inventory of bank owned homes at this time. Moving forward there are more loans which are delinquent, in default, and scheduled for trustee sale than ever before, which would typically lead to a significant rise in foreclosure sales. We do not believe this increase is likely in the near future given the continued political pressure on banks not to foreclose.
Foreclosures continue to be sold at trustee sale at considerable discount to both the outstanding loan balance and the current estimated fair market value. As we saw in foreclosure outcomes, the lure of an average 20.5 percent discount to fair market value has dramatically increased the number of properties sold to 3rd party investors. At the same time it is very clear why more properties aren’t purchased at auction – with banks pricing the properties they end up taking back as REO an average 23 percent more than the current market value.
Here the weekly totals of new SD REO listings coming on the MLS – no real increases:
|Week||# of REOs|
Of those 1,116 REO listings, 717 have already been marked contingent, pending, or sold (64%). The drip system is working great for the lenders!
In the same time frame there have been 4,753 non-REO listings inputted, and 1,850 of those are contingent, pending, or sold (39%).
REO listings make up 19% of the total new listings, but 28% of the contingents, pendings, and solds.