If you have been waiting for the “foreclosure tsunami” to hit the real estate market, you might not have to wait much longer. According to real estate analytics firm CoreLogic, another wave of distressed residential properties is due to “flood an already saturated residential real estate market in the coming months”[1]. Based on a recent report, the firm believes that there are currently 2.1 million “distressed, but not-yet-listed residential properties nationwide” in August of this year. That is eight months’ worth of properties not yet on the market and scheduled to hit all at about the same time.
Not counting this “shadow” market, there were 4.2 million units available on the market in August, which is estimated to be enough to supply the market for a full 15 months. Mark Fleming, CoreLogic’s chief economist, believes that the coming release of the shadow market onto the real market could dramatically increase the risk of more price declines in the housing market, and points out that “inventory is the key to predicting the future of home sales and prices”[2]. CNBC real estate reporter Diana Olick suggests in her column that “there aren’t enough investors to soak it [the distressed property inventory] all up,” and suggests that real estate investors are next in line for a “new government incentive” to get them to buy more houses.
Do you think that this is appropriate? Do we want the government horning back in on the housing market in light of its previous failures to “save the day?”
Thank you for reading The Bryan Ellis Real Estate Letter! Please click the “Like” button below, and we welcome your comments and questions in the comments below.
[1]http://www.bizjournals.com/portland/news/2010/11/22/shadow-real-estate-inventory-up-10.html
[2] http://www.cnbc.com/id/40319531
All I know is this – as I was walking thru Union Square in NY a couple of weeks ago there was a guy selling t shirts, one of which had a picture of an Indian and these words “If you think you can trust the government, ask an Indian”.
So, no more governmemt “help” is required.
Dear Government,
Leave us the F*^% alone. Your help has done nothing but create more problems.
Thank You Very Much.
Mel Johnson
The fact that the large amount of foreclosures are out there coupled with the pending event of the sh*^ about to hit the fan with the bursting of the dollar and government bubbles, anyone who is buying up Real Estate with the notion that they will be able to make profits by fliping or even selling them outright in the next two to five years is extremely naive. Even if you plan to buy and just rent them out for cash flow you can expect to end up with a tenant that is likely to lose their job in the near future and will therefore be unable to pay rent. So you’ll be dealing with eviction proceedings and losing money in the process only to eventually go through the same scenario time and again until the economy turns around and jobs become available again. Don’t look for that to happen any time soon!
Government offers square nails for round holes… The “solution” they come up with will work for a FEW situations. But today’s world requires individualized solutions that a free and far less regulated market- individuals using their creative energy- can provide. The idea that a government panel can provide solutions is simply unrealistic… but it does concentrate power into a group of people who are convinced they know what is best for every neighborhood.. urban and rural.. across the country. And what they generally believe is that massive centralized planning (ala Soviet style) is key. How ignorant is that? What we have is a political class that has slowly taken over – and they offer little to nothing in the way of contribution to our economy… and actually suck productive resources out of the economy.. and then can’t understand why we have massive unemployment. Their goal seems to be to grow a huge crop of dependents as a way to “buy” votes and continue to starve the actual productive components of our society. These programs and massive government “employment” programs are choking our free markets and reducing economic opportunity for ALL of us, along with diminished freedom.
So you know the government is just a branch of the big banks…those who own the Federal Reserve System….The FED is who controls our economy….in other words Big Banks control our economy…you just watch what the Big Banks are doing or want to do and you will know what the government will do. And for whatever the government is doing who do you think are the main beneficiaries? You got it. I hope this information will help you understand better what’s going on and better yet help you make better decisions in your life. Good luck and god bless….
Now isn’t this news, as I have saying for over a year, the shadow inventory is much larger than was being admitted to!
If the government helps things again on the housing front it will become even larger. Everytime the government becomes involved it it time to think of something else to do! The exception to this is those people able to take advantage of some of the more corrupt programs and still sleep at night, as everyone of those programs furthers the demise of our economy and all continue to destroy neighborhoods as time passes and politicians say if we just pumped more money into the program, this time it would work!
Look at Greece, look at Ireland today, look around and one can quickly see where this is headed unless we can get and keep the government out of our pockets and neighborhoods. The talk about abolishing Fannie and Freddie is becoming a bit louder, it needs to become a roar, HUD needs to be next.
Buy low, Sell High.
In my area (Winchester, VA) money can be made flipping houses. Houses are selling (I sold one last week that was a flip). Finding that next deal has become a pain in the ass. Our local brokers are pricing foreclosures $15k – $30k over their worth. Add in the Fannie Mae 15 day wait for owner/occupants = a shit storm of offers from investors.
Gotta be smart… know what it will take to fix the property without losing your profit, a pray that the bank will take your lowball offer.
From Disqus Tue Nov 23 16:41:01 2010
X-Apparently-To: framemaster@bellsouth.net via 68.180.196.143; Tue, 23 Nov 2010 08:41:05 -0800
Return-Path:
Received-SPF: neutral (mta1005.sbc.mail.sp1.yahoo.com: domain of is neutral about designating 67.228.244.115 as permitted sender)
X-YMailISG: NUjdU6UcZAp0q32p5M6efvlhvNNGHZDRfAKswUQ0fl2cz4vQ
RZlltrk7AYxj9bFryq4bfPzwBEDvZDbbn7ZDJXmmn2XaHaKLI_IPh18bIY6z
w9pvfHjbScUGOUdx9xOfDn6v1xBpKR9Ex7k5SPc13LF15CMp5PD3KD96GCNm
Vj5fUEvakDY5xBdNnpQQdv88Tg.Q6DLdB5sWUzsK7t3Ik1msxHWXPt3yhtCB
Z18nGk9xmtWtcxQFOpeME4SEROfU3WwpRNfFlgEeKJq5fIPfoJp3M_wu3.Wu
Gt7erVKm.g5OFng5fr0O_ODJEKuPgOpDA10fibn1XFRR9EKYZ3Md7w6LSQoJ
Av3K.Cfzn6O0CdDjW8yeSapkQHowPaqAEjGBAvziRn58As7gF112rcxW_KPW
PxT65mrRZ1Ep1vpdSJuE7V02GMUZajj7w_W5fJAcdUm2DYbKBHAyYhUA2JoA
kVao9se12fR_U33h1nvfP1kSFBcTTvuGBUDyEmFbrr4DQFjuDU3_jB0elI0b
on9riiHD3w–
X-Originating-IP: [67.228.244.115]
Authentication-Results: mta1005.sbc.mail.sp1.yahoo.com from=disqus.net; domainkeys=pass (ok); from=disqus.net; dkim=pass (ok)
Received: from 207.115.11.41 (EHLO fgateway11.isp.att.net) (207.115.11.41)
by mta1005.sbc.mail.sp1.yahoo.com with SMTP; Tue, 23 Nov 2010 08:41:05 -0800
Authentication-Results: isp.att.net;
domainkey=pass (no signature error) header.From=
Received: from disqus.net (mail.disqus.net[67.228.244.115])
by isp.att.net (frfwmxc11) with ESMTP
id ; Tue, 23 Nov 2010 16:41:03 +0000
X-Originating-IP: [67.228.244.115]
Received: from disqus.net (localhost [127.0.0.1])
by disqus.net (Postfix) with ESMTP id 9410E9520F
for ; Tue, 23 Nov 2010 16:41:01 +0000 (UTC)
DKIM-Signature: v=1; a=rsa-sha1; c=relaxed; d=disqus.net; h=content-type
:mime-version:content-transfer-encoding:subject:from:to:date
:message-id; s=notif; bh=Su7h6HzSkIzMyhIYzZpEsuJobtE=; b=vQEw54p
OPxlO0b8BbklgsPO9pPEPXQ7dlID+jnxD/yoDmdy4gDVGyOCkalrnLExtwAqY++z
ka77+okH37RfwDwAeO3DizltAE/FDpq0CNrT8YbnrB7SN+7+uulXSwAcPiwy7CSZ
VzN1B50YSYMVj8rb4U1Iy0U5i36xfBsx5Qe4=
DomainKey-Signature: a=rsa-sha1; c=nofws; d=disqus.net; h=content-type
:mime-version:content-transfer-encoding:subject:from:to:date
:message-id; q=dns; s=notif; b=QrTpOUQ2cMPDhulezJUdnX7iT1E5pyaMq
57JcumFnwXJe6LbHiKxNXPIqNrTxx3FET1Ol2DjMHWHYBD3+UnFSnMtsK03OxKon
8RFWC1t9zfsyOU7Y8Fcgkpbb0o+gPISc3Uu75FQtbSt+rUrDkUidfrSdOn1Vie0f
PKWCjK+lX0=
Received: from celery.disqus.net (unknown [10.13.198.6])
by disqus.net (Postfix) with ESMTP id 918969410F
for ; Tue, 23 Nov 2010 16:41:01 +0000 (UTC)
Content-Type: text/plain; charset=”utf-8″
MIME-Version: 1.0
Content-Transfer-Encoding: quoted-printable
Subject: [bryanellisrealestateletter] Re: CoreLogic Estimates Shadow Market Volume at
2.1 Million
For many people, these are just big numbers. They don’t get the REAL issue, especially if THEY don’t live next door to one of these “shadow” properties or drive by MANY shadow properties in their neighborhood or on their way to work. 2.1 MILLION shadow properties NOT repossessed – just numbers. 4.2 MILLION listed properties languishing on the market nation-wide, with price drop after price drop – just numbers. Thank goodness, many people (perhaps you) are not living this foreclosure/property devaluation HELL. Unfortunately, I can’t avoid it, even if I tried. I live in one of those neighborhoods with “shadow inventory” – FIVE to be exact. These “shadows” have been empty up to 26 months (could be longer; I stop paying attention). They look horrible both inside and outside. Beyond looking horrible, these house *ARE* horrible. At least two have heavy mold. To what degree they’re trashed, I don’t know. Here’s what I *do* know: my house and my neighbors’ houses CONTINUE DROPPING IN VALUE. We couldn’t sell if we wanted. If we NEED to sell, we have 2 choices: 1. Show up at the closing table with the difference b/t what we owe and what pitiful price for which the house sells. 2. Short sell (if we can prove hardship). Of course, some of you in recourse states might suggest a 3rd option (albeit a horrible option by the way) – walk away and look over your shoulder for debt collectors hot on your trail for up to 20 years if you’re walking away from a house in Florida that is. The 2.1 MILLION shadow properties are NOT the bigger problem. Bigger problem is how these shadow properties will HAMMER down property values even more than damage down already, causes more distress when your neighbor, family member, friend or co-worker loses his job and has to leave. This is not conjecture on my part, is it? For some of you, this is brutal reality.
NOTE: On my Facebook real estate page, take a look at this house down the street from me. This is a REAL “shadow” property. Do you feel bad for me now? Btw, that one is just 1 of 5 in my neighborhood. Check it out so you can shake your head and be grateful it’s not your neighborhood littered with this garbage: http://www.facebook.com/SarasotaRealEstatePros
at least they should recognize that investors are a significant factor in boosting the market. and agood boost or incentive wopuld be to ease lending restrictions on those with multiple properties. Investors are not the villian.
The government is not the solution. The government is the problem. As long as they keep interfering with the Market nothing is going to fix this mess.
Anthony Garcia
I would be really surprised at government incentives for investors. The latest crap from Freddie & Fannie is the 15 day wait for owner occupied buyers on 2-4 unit MF properties. Do they think that will speed up the process?
Bill I agree with to a certain point. Poor regulation was a foundation cornerstone why OUR country finds itself in its current condition. Would you agree with me that banks are not lending as we assumed they would after they received tax payer bailout money? Last I checked ALL of the banks who received bail out money are very much in positive cash flow for the past two quarterly reporting statements. Now having said that can you honestly believe if the federal government would not have stepped in to save the country nightmare. Some have suggested unemployment rates as high as 35% with massive financial system failures. Yes some people would have made a profit but far more would have lost everything that those profits would not be recognized. I cannot say what the total solution plan is but the people in Washington D.C. failed us as far back as 1980! I do believe we need to get people into elected positions that are there to serve and not get rich through corruption. I seriously suggest we remove our elected officials’ retirement plans and only provide health care for them while they are in office. The other item I would like to see is the removal of corporate money from the political campaign. You should not be able to buy yourself into office or someone else buys you into office. This is what I consider the first steps into getting true patriots back into guiding this country in the direction we ought to be moving.
Yeah, we really need the gov’t. to step in and help. I mean, afterall look at what they have done for us: Trashed the financial markets, kill employment,
the great mortgage debacle. Where do I sigh up? Time to pick up arms and declare war on our government.
I am not for the Goverment bailing out any more private business. They already waster trillions of dollars for what, where are the jobs.
Thank you JB30506 for those insights