Reports are pouring in and some patterns are emerging in Florida, Michigan, Illinois, Ohio, Maryland, Virginia, Colorado, New York, the Carolinas, Pennsylvania, California, and Washington. And that's just the people we've met with and spoken to in the last two weeks. Let me use this space to report what we are seeing and encourage everyone to weigh in.
Inventory shortages are a recurring theme, which of course means upward pressure on prices. Not a turnaround yet but a critical benchmark, because these things can cascade and create momentum. People experience or hear about a bidding war, and a sense of scarcity sets in. Any competition among buyers is a good thing.
We know some of this is artificial, and that there is pent-up supply. The shadow inventory is still building. Washington is pushing the banks around again, this time saying they must not evict foreclosed borrowers until after Election Day. We've confirmed this with two sources. This has been going on in some form since the bailout in 2008. The result is a log jam that will eventually break loose with 3-5 million REOs and short sales. People close to this say it will lean heavily toward short sales. Lenders are being increasingly cooperative with short sales, and even soliciting underwater borrowers.
In many places there is a shortage of rental homes for all these families. People who make a calculated decision to get out from under a pile of negative equity are not necessarily looking to make major changes in their lives. They want to live in the same school district, and not in an apartment. They have kids and dogs. They are fantastic tenants because most of them have jobs, were able to pay their mortgage, and will have no trouble paying their rent. Their credit is often blemished solely by the short sale.
[Our area of focus is the residential investor market, and we are getting lots of traction equipping the industry to compete for it. We've all woken up to the fact that 20-30% of all home sales, every year, are investor purchases, and yet very few have developed that specialization. It's a major trend, and the flip-side of the short sale coin. Check us out here]
There is also a market driven facet of pent-up demand that we are hearing about; sellers who don't want to sell in a buyer's market. Time will tell how long it will take for them to loosen up, but when a seller sees the price rising on the house they want to buy, they get anxious. People won't sit in neutral forever.
The last common theme all around the country is that everyone is busy, and hard work is paying off more than in previous years. Love that.
Please tell us about your market. What changes in attitude and behavior are you seeing from buyers and sellers? Do the micro-trends above reflect your area? What can you add to the brain trust?
thanks for reading
-greg
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