How much worse could the local real estate markets get in 2010?
The folks at TransUnion noted last week that approximately 10% of California mortgage borrowers were at least 60 days late in the third quarter of 2009:
Let’s try to quantify what that means for the near future, and 2010. How many more homes are lurking in the inventory shadows?
Can the local markets handle more distressed inventory?
The city-data charts show how many people in each zip code have a mortgage. Hypothetically, let’s take 10% of the total mortgage holders in each zip code, and compare to the MLS sales, Y-T-D:
|Zip Code||60-day lates||MLS Sales YTD|
It looks like the local markets could have to endure substantial increases in distressed offerings next year. How many have already received a foreclosure notice, and are on the NOD or NOT lists?
60-day lates – NOD/NOT = Shadows
|Zip Code||60-day late||NOD+NOT||Shadows||MLS Sales YTD|
With the truth finally coming out about how lousy the loan-mod results have been, you can’t really hope that many of these defaulters will find a way to save themselves. Even if there are a few who are just loan-mod bluffing, and are willing to go back to making their regular payments instead of being foreclosed, it can’t be many – maybe 10% to 20% tops?
For things to stay the same in 2010 as they were this year, the banks will either have to slow down the drip, or regular sellers will have to step aside to let the distressed sales through. I don’t think either one of those will happen – it’s been surprising to me how many regular equity sellers have been willing to sell these days. I’ll try to get a count of those next, but any way you look at it, next year should bring relief for buyers!