Shadow Housing Inventory: Two Houses for Every One for Sale

[girl gone mad]

Shadow Housing Inventory: Two Houses for Every One for Sale
http://www.nakedcapitalism.com/2010/07/shadow-housing-inventory-two-houses-for-every-one-for-sale.html

RealtyTrac, as reported on Housing Wire, gave a gloomy update on the US housing market. RealtyTrac does granular collection of data on foreclosures, capturing every filing. One of the shortcomings of this approach is that processes vary by state (as in some state require more court filings over the course of a foreclosure than others). In addition, homes can go in and out of foreclosure (an owner gets the first notice, contacts the servicer and works out a catch-up plan, and later falls behind again). So the commentary of RealtyTrac and other market participants is essential in interpreting the data.

The key takeaway:

James Saccacio, CEO of RealtyTrac, said at the current pace, more than 3m properties will receive a foreclosure filing by the end of the year, and lenders will repossess more than 1m of them. According to a report from the Toronto-based Capital Economics, the weight of the shadow inventory may contribute to a double dip in the housing market. The report found that for every home currently on the market, two homes are waiting to be sold.

“The roller coaster pattern of foreclosure activity over the past 12 months demonstrates that while the foreclosure problem is being managed on the surface, a massive number of distressed properties and underwater loans continues to sit just below the surface, threatening the fragile stability of the housing market,” Saccacio said.

Yves here. The scary part here is this estimate of market overhang refers only to foreclosed and distressed property. There is another category of hidden inventory, people who would like to sell but aren’t even listing their houses. These would include people who want to relocate, aging individuals who’d like to downsize and had hoped to be able to liberate some equity.

http://www.nakedcapitalism.com/2010/07/shadow-housing-inventory-two-houses-for-every-one-for-sale.html">more...

[TwilightGardener]

1. Slightly off topic, but don't for the love of God ever let Realty Trac get your email address.

They are RELENTLESS. I really hate them, they're vultures making a killing off the whole foreclosure mess. They do a happy dance to bad news.

[leftofcool]

2. Not only that, they are a rip off

They will send you lists of foreclosures that have already been purchased.

[TwilightGardener]

3. I've found that the best way around them is to go to my county's Public Trustee website--

Realty Trac gives just enough info on Trulia listings that I can usually figure out the house address using the PT's info (which is probably most of what Realty Trac uses). I started to sign up with them, but never pulled the trigger all the way and paid them because the particular foreclosure I was interested in went off the market. I have no doubt they're ripping people off, just generating lists with no research behind it--all just normal available county and MLS info. What a racket.

[leftofcool]

4. Exactly and many foreclosures can also be found in local papers.

They are basically charging people for public info.

[jtuck004]

5. So more come on the market, the price goes down, people can't sell

the home where they planned for their retirement, more homes go, they can't tap their equity, sell at a lower price which lowers other values, other homes are foreclosed.


1 Million foreclosures beats last year (they are getting more efficient) and the areticle above indicates 2 mill more in the pipeline, which will hurt others...

And this is just one sector. For the life of me I can't see why people aren't in the streets demanding a change in policies, stimulus, and re-building for the 21st century. But maybe we need more pain...

[Warpy]

6. Some markets are especially hard hit

Florida has been especially devastated and that's with a huge shadow inventory being kept off the market in an attempt to keep prices from falling to rock bottom.

People don't revolt until they have nothing left to lose. We might get there yet.

[pscot]

7. I take a large grain of salt

with stuff I read at naked capitalism. I fear they sometimes exaggerate for effect.

[Crazy Dave]

8. This is all thanks to people buying and selling homes like stocks

Both my grandparents lived in the same houses they raised my parents in. They actually bought a house to live in, not flip for a profit.

Stocks used to be that way too. Our grandparents also found a company they trusted and believed in and bought for the long term. Then all these "buy" then "sell" five minutes later dickheads all got into the market and that's what screwed it up. Same with housing.

[jtuck004]

9. That's part of it, but please don't forget to give a HUGE share of

credit to the greedy folks on Wall Street. They created over $140 trillion in complex derivatives using less than the $13 trillion in the U.S. mortgage market (maybe more, that's all that has been uncovered) and when it all folded insisted that the American taxpayer reimburse them for their foolishness, now to tune of $14 trillion, plus a ton of crap derivatives held by the Fed as we speak.

They would like for us to blame the homeowners, and there is some blame there, but the carelessness and collusion between Wall Street, the Fed, and the Treasury is what put 15 million people out of work, and we should not forget it. Especially since it continues...

[girl gone mad]

11. Many people miss this fact.

Wall Street created the artificial demand for mortgages, not the other way around. It wasn't an organic movement of people seeking housing. Wall Street needed mortgages to repackage and sell to feckless investors and that is what fundamentally drove the lax lending standards, overbuilding and subprime and flipper mania.

[Hawkowl]

13. Like buying stocks on MARGIN

Just to refine your point a little, it was a credit induced bubble. The bubble occurred because the only qualification for getting a mortgage was breathing. So Wall Street flooded a finite market of commodities (housing) with an infinite supply of money. Classic value inflation. Now the funding is cut off, and logically pricing should fall to about where it was before the housing bubble began (actually it will overshoot on the downside). So even people who simply bought their houses to live in are going to see their equity vastly reduced, if not completely wiped out. Valuations are going to fall back to the mid 90's at least.

[Crazy Dave]

14. I never bought my house as an investment, I bought it to live in...

...and paid it off as quick as I could.

I don't play around with stocks, gold or anything else that promises high gains for that matter. The best way for me to make money has always been not to spend it unless I have to. Had a TV 16 years till it burned up, driving one vehicle that's 11 years old, etc. let's me save about $200 a week. Not going to retire rich with that but could care less :)

[barb162]

10. wha?

"the weight of the shadow inventory may contribute to a double dip in the housing market...."

I see it all as one long dip. Just like certain individuals talk about a d.d. recession, it's in effect one long recession. Unemployment kept growing, etc.

[jtuck004]

12. There is no universally accepted definition of a recession,

so everyone is pretty much free to decide when they see the beginning and the end.

The National Bureau of Economic Research says our current recession started in 2007, and has not ended
as of April 2010. You can read their statement here

Others may have financial or political reasons to declare a recession has started, ended, or never existed.
and those are all over the place.