Don't You Hold Back on Me

The everlasting story is this; Are the lenders that created this problem in what may be considered pure stupidity smart enough not to inundate the market? I have seen industry experts argue both sides, my opinion, yes they are smart enough and their current market REO pricing manipulation shows exactly that.

The number of homes listed for sale in several housing markets fell last month to levels last seen at the start of the housing downturn. That’s raising hopes that several of the hardest-hit housing markets may be stabilizing.

But the housing cynic may wonder: how much does that have to do with banks holding foreclosed properties off the market to prevent a new glut of properties from hitting the market?

Figures released by ZipRealty, a national Real Estate brokerage that tracks Realtor listings in 28 major U.S. markets, showed that the number of active listings in those markets decreased by 2.1% in June from May. I did a very successful seminar for Zip in Walnut Creek last May by the way!

California posted the most dramatic declines, with inventory falling by 54% in Los Angeles—a level last seen in Sept. 2005— while listings fell by 56% in San Bernardino. The number of homes listed in the San Francisco Bay Area dropped below 20,000 for the first time since Dec. 2006. Listings fell to a Jan. 2006 level in Orange County and a Feb. 2006 level in Phoenix.

It may be too soon to know if these are genuine “green shoots” in the West. After all, there are some signs that banks may be delaying foreclosures, either because they’re overwhelmed with a glut of delinquent loans or because they’re strategically holding off on over saturating the market. That so-called “shadow inventory” could lead to an uptick in foreclosure listings later this year.

For example, notices of default, which mark the first step in the foreclosure process, jumped by 10% in California last month from the previous year, according to ForeclosureRadar.com.(Which is the best foreclosure software in the market, this is fact not opinion) Sorry it's just in California. But notice of trustee sales—the second step in the process, where lenders set a foreclosure sale date—fell by nearly 15% in June from the same month one year ago.

It’s unclear why trustee sales have fallen even as defaults has risen. While California has a new foreclosure moratorium, banks that have loan modification programs in place have been exempted, so that’s not a terribly satisfying answer.
But can we truly expect one from the banking land of Chaos?

-Christopher Rockey