Where are my OREOs?

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irvinehomeowner

irvinehomeowner

Well-known member
First off...
oreo.jpg


Second... the Wall Street Journal has some theories about the flood that hasn't really demolished home prices:
http://blogs.wsj.com/developments/2010/09/16/wheres-the-foreclosure-flood/

The author cites 3 main reasons why we haven't seen Noah's Ark yet:
WSJ said:
* Some delinquent loans have ?cured,? either naturally or through loan modifications. Even unsuccessful loan modifications have stretched out the amount of time that it takes to move a loan through the foreclosure process.
* Banks are getting better about approving short sales, where a home is sold for less than the amount owed, even though the process is still far from seamless.
* And even when a foreclosure happens, more investors are buying the properties from banks at courthouse auctions, which means that the property won?t show up as REO, even though it could ultimately hit the market.
Click to expand...

So while there probably is a ton of shadow inventory out there... it probably won't hit the market all at one time which may keep prices from crashing as hard as predicted. My question is do the people who felt this wave was going to hit hard still feel this way? I was one... and although I still am hoping and holding out for banks running out of tricks and having to unleash these OREOs eventually... I'm afraid that with the help of gov shenanigans they may still be able to just trickle these out for a long time. My faith is waning... I need a sign to tell me my milk and cookies are still going to arrive.

The problem is, even if a flood does drop prices another 10-15%... if interest rates rise... is there really all that much of a cost difference?
 
god I am SO hungry right now and then i click this topic and BOOM. Gigantic delicious cookie.

if prices drop and interest rates rise (and as things stand the chances of interest rates rising at the moment are like, not very good at all) it would still be worth it because lower sales price = lower property taxes.  And your downpayment goes further.    A 15% drop probably pushes starter homes into reach for a lot more people --  someone on my topic from last week mentioned that they now finally have the income but it will take them ages to save for a down payment - a 15% drop makes the downpayment requirement that much lower for that people.  A 15% drop on a 300k home is 45k.  Thats not insignificant.  And I think that a skyrocketing interest rate isn't likely, even if rates do edge back up. 
 
While the $45k drop in price seems high... that's only a $9k drop in your down payment if you are going 20% on a $300k home, even less if you are doing 3.5% FHA (~ $1600). That savings difference compared to even a 0.5-1% rise in interest rate becomes less significant depending on how long you stay in your home.

And that's the conundrum we are in now... should we wait to see what type of products and prices shake out in the next 2-3 years or use the low rates to buy something a little higher than we were looking at. It's a double-edge sword... no one can guarantee prices will go down (although I do think they will but not a lot) but no one can guarantee rates won't go up (although I also think they can't go up a lot... at least not until after the elections).
 
the 45k would make a difference for me personally, I *think*  -- but we are buying this first place with an eye towards a near-future rental property and a far future potential appreciation gain, so the lower price higher interest rate scenario doesn't affect the first item at all and affects the second in a potentially positive way.

 
After reading the IHB for the last few weeks, I still feel Irvine is set for a fall. There is lots of shadow inventory and it is only getting worse. At some point the 'Banking Cartel' will fall apart and inventory will increase.

Buyers are not stupid and they see the writing on the wall despite what the NAR and OC Register say. Even given record low interest rates, demand has fallen off a cliff. They know in many markets, there is more price declines ahead. Also, with such high unemployment I don't think we will be seeing a buyer lead recovery anytime soon.

The x factor will be Obama and the Fed. Right now there doesn't seem to be much of an appetite for more government stimulus. If the Republicans gain control the Hosue, then we will be set for 2 years of political gridlock. If the Dems retain control, then we may see even more BS tax dollars wasted on propping up the RE market.

Irvine may never crash like the Inland Empire but there is still a lot of room for prices to fall closer to long term affordability.
 
But how far will that fall be? Back to adjusted 2003 prices?

It's just so very hard to see, esp with Woodbury selling out of bigger non-3 car garage SFRs at over $800k a pop.
 
I'm in the bear camp as well.  I truly believe that this mark to fantasy accounting that the banks have at the moment is really keeping the supply in control.  However - I don't think this can continue long enough for the market to re-inflate itself nor can the squatters be allow to continue to live for free.  Banks *eventually* will have to foreclose and write-off their holdings at some point.  When this happens,  I think prices will fall another 10-15% before its all said and done, not sure when that point will be reached.  After tht, I truly hope that home prices remain flat for years to come. 
 
iacrenter said:
If the Republicans gain control the Hosue, then we will be set for 2 years of political gridlock. If the Dems retain control, then we may see even more BS tax dollars wasted on propping up the RE market.
Click to expand...

I agree with the rest of what you wrote, but why is it that you imply the D's are in bed with NAR? 

My impression is that it is the R's that are  most closely aligned with the real estate industrial complex.

In fact, my guess is that a R controlled house would be more likely to pass new housing props.
 
yeah my recollection is also that the people pushing hardest for the housing tax breaks were on the R side as well - back when this was all majorly under discussion.  D side was pushing more for banks to do modifications and extensions and things like that, R side was pushing for bigger tax credits.  I don't think anyone's been seriously discussing doing anything further though, you still see articles about it but it almost always is an article where the NAR or the National home builders association or whatever goes "If only we had a huge tax credit from the govmint people would buy stuff!" and the political analyst or some politician says "yeah its not too likely we're gonna do it, sorry".


I'd be very happy with a 15% drop.  I think prices are low enough now though that its at the point where IF the market has enough people willing and able to buy they will.    I just don't know about certain segments of the market - the middle in the 500-700 range seems pretty comfortable with what they get for that money -  I mean I think they'd like MORE but they seem willing to buy right around there.  The craptasmical dinky little homes in mediocre parts of anaheim selling for 440k, or the million dollar stucco boxes are the ones I'm not sure about.    Are people buying those?  Maybe they are!

 
Unfortunately not many are making to actual REO's.  I too am looking for dem OREOs to hit the market.  In areas that I'm watching, I've seen a 10-15% increase in WTF asking prices since the asking prices back in April 2010.  My wife is asking WTF are these sellers smokin?  We need some more OREOs to put more downward pricing pressure on prices.  I still see quite a few listings that even with a 10-15% haircut seem like they're still overpriced. 

Like these

http://www.redfin.com/CA/Irvine/22-Townsend-92620/home/5958471
or
http://www.redfin.com/CA/Irvine/31-Sanctuary-92620/home/5959278

I also notice that only a few properties make it to the REO stage in Irvine.  Lots of pre-foreclosures are constantly getting their auction dates postponed month after month...  I'm only seeing about 94 REO's have been taken back by banks since late May. Another 250 in Preforeclosure and another 380ish  in auction status, but who knows when they'll go to short sale or the courthouse steps.

We need banks to aggressive get homes to REO status or push the short sale cycle with the real intent of trying to approve those short sales.
 
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