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Bank owned properties – is supply running low?

By Jane Pacheco

Real Estate Broker/Owner with Pacheco Realty & Financial Services

September 20, 2010 05:53 PM

When the news came out about banks having a shadow inventory, and how they are holding on to their REOs, it made me realize the power that rests on banks to influence the market. With the law of supply and demand strongly manifesting its effect on home prices, the banks’ ability to swing home prices is unquestionable.

It then begs the question – how much REOs are actually being released by the banks to sell on the market? Take a look at the number of REO listings added to MLS on a monthly basis (data is taken from BayEast MLS, from the cities of Fremont, Union City, Newark and Hayward):

Total REO listings

REO listings by city

Based on MLS data tracked from Jun ‘09, REOs peaked in July 2009, when MLS recorded 210 REO listings in the selected East Bay cities.
A secondary peak occurred in March 2010, with 170 new REO listings posted on MLS.
Hayward has historically been one of the most severely hit by the housing downturn, and this is evident in its higher REO supply, compared to Fremont, Newark and Union City.

The news we read everywhere paints a picture that defaults are rising, as homeowners are finding it increasingly difficult to keep up with payments. The MLS data does not seem to account for a heavy NOD conversion into REOs. Instead, keep in mind that defaults can take several routes, and foreclosure is just one of them, actually the last resort.

Loan modification
Short sale
Deed in lieu of foreclosure
Foreclosure

The jury is still out on when the so-called shadow inventory will be released, or how much of it will be released.

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Debbie Laity

Cedaredge Land Company - Cedaredge, CO

Your Real Estate Resource for Delta County, CO

Nice analysis for your area. I hope you don't see an increase in foreclosure...supposely the banks are becoming more receptive to the short sale alternative. I am working a short sale now, and so far it has been a positive experience. I also list a lot of bank owned properties and am trying to do more short sales to prevent more foreclosures in our area.

Sep 20, 2010 06:00 PM

Connie Johns

Tailored Real Estate Services - Toledo, OH

Toledo, Ohio Area Real Estate

Very nice post Jane. You did a very nice job of showing the impact on your market by REO's being released and posed some interesting questions. Makes a person think.....

Sep 20, 2010 06:09 PM

Elite Home Sales Team

Elite Home Sales Team OC - Corona del Mar, CA

A Tenacious and Skilled Real Estate Team

There are still a lot of people in trouble and more are on the way.

Sep 20, 2010 06:23 PM

Mario Gattavara

Coldwell Banker Lifestyle Properties - Oroville, CA

(Lake Oroville Area)

I just received 3 assignments in my in-box from one company alone. That was a surprise. Just happened two days ago.

Hard to say at this point where and when more will flood the market as they already have. Excess REO homes sitting on the market will mean loss of values. With lack of motivated buyers this is a great mix for the economy.

Sep 20, 2010 07:28 PM

Jane Pacheco

Pacheco Realty & Financial Services - Fremont, CA

Debbie, Foreclosure is the worst, short sale is a better alternative, although the homeowner still loses his home in both cases. It's a sad ending either way. Good luck with your short salea and REO listings!

Jane

Sep 21, 2010 02:23 AM

Connie, it's hard to see where we're headed because news going around can be contradictory. Let's hope it is not a severe hit!

Mark, It seems that way, but hopefully more homeowners are able to save their homes this time.

Mario, Oversupply will surely bring down values. Let's hope REOs don't severely hit the market.

Sep 21, 2010 02:31 AM

We are seeing more NEDs filed in our area, and the requests for BPOs has increased.

Sep 23, 2010 04:59 PM

Bank owned properties – is supply running low?

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