Remember The Housing Market 'Shadow Inventory' That Had Everyone Completely Freaked Out? en-us Wed, 31 Dec 1969 19:00:00 -0500 Fri, 26 Dec 2014 15:07:32 -0500 Sam Ro Doug in Virginia Fri, 07 Feb 2014 09:58:42 -0500 Late mortgages are not carried at full value. Try to get some education here. MotorCityMiserable Mon, 03 Feb 2014 10:12:12 -0500 Notice that "estimates" are used? There is a reason; none of the property owners wants, or has to supply the information, and they are allowed to use relaxed accounting principles to show valuations on the books. lapdance Mon, 03 Feb 2014 09:49:37 -0500 Childish article. Think before you start typing next time. jimmy mactheknife Mon, 03 Feb 2014 09:28:12 -0500 YOU are correct on two points. First, the remaining inventories of foreclosed and vacant homes are more and more in dilapidated condition and in less desirable neighborhoods. Thus, they are less likely to move even at significant discounts to current market values as there is less certainty about value and too much risk investing in their rehabilitation. Second, the shadow inventory is BS since it does not fully aggrandize the current state of the property. Until clear title is obtained by the bank in a court of law, it is clouded by the previous owner's potential claims and potential therefore to be refinanced under one of the Obama giveaway programs. thoughtaboutit Mon, 03 Feb 2014 02:33:44 -0500 "Why should homeowners be protected?" The invisible hand of government, and not the marketplace, made home ownership a reality for millions post WWII. This was a stated goal of previous and current Presidential administrations, enumerated at countless States of the Union speeches and in policy. Right or wrong, countless generations grew up in a house that their family owned rather than a rental property, or an apartment, or a shack, or a van down by the river. I do not count myself as a Progressive and assuredly I too have made the appropriate sacrifices to save money and buy a house (admittedly later in life, in my early 40s) because my wife felt an overwhelming emotional need for us to do this. But I submit that the benefits to society overall need to be considered when questioning additional government intervention in the marketplace to stabilize the prices of assets which drive so much of our economy. thinkaboutit Sun, 02 Feb 2014 23:24:17 -0500 So the banks are manipulating the market after being bailed out. Someone should sue and force all of them to be listed for sale immediately. Shouldn't the market decide the value? Isn't that capitalism? If they listed them all and home values reduced 50%, isn't that the true value? Why should homeowners be protected? Let the market decide. Homes are still way over valued but the market is being manipulated. Eventually, the market will have to correct itself. With wages of the 99% deflating or at the least stagnated, no reasonable person would expect the value of a home to do anything other than follow this trend. Petunia Sun, 02 Feb 2014 19:32:14 -0500 If the banks start selling the inventoried houses they own for market value, it will affect the value of other properties in the neighborhood which could be in their portfolios. This will force them to write down the value of the inventory and take the losses, which is what they are trying to avoid. They don't want to turn the inventory into real losses as long as they can pretend that the houses have the same value and that the potential buyers have the income. Evolving Sun, 02 Feb 2014 16:27:38 -0500 Yep,,, And all those overpriced mortgages are still on some bank's balance sheet at full value. Birdfinger Sun, 02 Feb 2014 12:54:30 -0500 Sorry, that tilting metaphor might be dated. Just say that the boom and bust scenario is getting more and more amplified. Not good, man. Not good. toddd Sun, 02 Feb 2014 12:53:50 -0500 Housing prices plunged severely, it's not surprising the inventory is drying up. You can't find any of the low priced homes that you could even a year ago. It's not that housing has made a full rebound, it's just that the trough was so deep and sudden, there was no way the low cost houses were going to be available for long. Birdfinger Sun, 02 Feb 2014 12:49:59 -0500 The real issue is the Fed and the government keep playing the economy like a pinball machine. And they keep tilting. The next tilt might be the last. Dennis954 Sun, 02 Feb 2014 12:12:32 -0500 You forgot to mention that the hedge funds are rolling all those rental properties into REITS and will unload them all on to the unsuspecting public investors just before rents start falling from the over supply of rental homes. They will become the second shadow inventory. mike77 Sun, 02 Feb 2014 11:25:39 -0500 As long sd the banks refuse to foreclose on non performing mortgages ( I know people who have not paid since 2008, no actions against them yet), as long as they leave houses empty ( 1 few blocks away from me, sold for 780k in 2006, never occupied), no one really knows what the shadow inventory is. What is clear, is that investment vehicles ( I don't know, hedge funds etc) are buying properties, doing some work and renting them out. Things are getting better, but from what level is impossible to know. Downhill from here Sun, 02 Feb 2014 10:50:56 -0500 What are you saying? That the Fed and banks would purposely keep properties off the market? Why would they do that? It's not like the Fed's purchasing hundreds of billions in MBS's and keeping interest rates low has enabled hedge funds and private equity pools to buy up foreclosed and distressed home a discounted rates pushing the value of the foreclosed homes on the banks' books up by 23%. It's not like this strategy has made the banks and financiers lots of money while leaving the remaining homeowners "grateful" that their homes are now back to their 2005 values. QE4 Sun, 02 Feb 2014 10:32:42 -0500 I heard Pension and 40k fund managers were into buying up property now for investments. That's going to make the number of unsold homes decrease faster, whether they were listed as official inventory for sale of not (shadow inventory). The shadow inventory is still there, mortgage companies sold a number of foreclosed homes at a discount to get them off their hands, however, the pension/401k funds are looking to sell them too at some point in the future, so they are still technically the same inventory as they were before. It's just that the mortgage companies aren't holding them to sell immediately. trooble Sun, 02 Feb 2014 10:10:24 -0500 Some units in the shadow inventory are unsellable because they were built with bubble money in remote deserts. Other units are decrepit or occupied by people it might be tricky to evict. Don't know how many, but a lot. Fapers Sun, 02 Feb 2014 10:00:52 -0500 I have a friend that lost his job and hasn't made a mortgage payment in over two years. He's tried short selling it, but every time the bank drags it's feet and he loses the buyer. Alreten1 Sun, 02 Feb 2014 07:31:37 -0500 just before I looked at the paycheck saying $8772 , I be certain that my neighbours mother was like they say truley erning money part-time on their apple labtop. . there great aunt has done this 4 only about 17 months and at present paid the mortgage on there condo and bought Fiat Multipla . check this link right here now,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, WWW.Works6.COM thisissoeasy Sun, 02 Feb 2014 07:23:57 -0500 The shadow inventory is housing that banks kept in legal limbo while taxpayers footed the bill. Banks are silently keeping these properties in a state of flux until they can spin and make a profit. Doug in Virginia Sun, 02 Feb 2014 06:58:59 -0500 House prices have risen consistent with the overall cost of living for decades if not centuries. On a national level, they went down for six years 2006-2012 before recovering. (Not all local markets did this, of course.) The opinion expressed here is inconsistent with history. While there are some downsides to home ownership esp. in certain markets, on the whole, it is the largest source of wealth creation for most of the population, and it is still an affordable option for most people in most of the country. The people who can't buy a house (no down payment, bad credit, need to move frequently) would still not able to buy even if prices declined. c smith Sun, 02 Feb 2014 06:57:07 -0500 Exactly right. The only people a 23% increase in house prices is "good" for are the banks who made all the bad loans a decade ago. The natural (and beneficial) state of capitalism is deflation. Deflation is the mechanism which transmits productivity improvements into real wage gains for the masses.When bankers and politicians connive to PREVENT it, and even promote the opposite, they are working purely to preserve their own power, wealth and influence. More broadly speaking, the benefits of capitalism happen when capital is recycled into new growth. When political power short circuits creative destruction, as is happening in the current U.S. real estate market, growth is compromised. This is the cause of the weak (some would say non existent) U.S. recovery. Banks and the Fed are acting to preserve failed investments from previous cycles, directly blocking recovery. Please explain BI's position on inflation, Sam Sun, 02 Feb 2014 06:16:10 -0500 Sam, you wrote: "The direction of these numbers can only be interpreted as good news." This I have trouble with. Is inflation in housing costs "good news" or "bad news"? Is this article written for those who own homes, and not the other 50% of the population who doesn't? Why? Why would inflation in an essential asset, and the resulting impact on disposable income be "good news"? Are increasing food prices also "good news"? Surely higher food prices are "good" for farmers. And how about energy costs? Are rising oil prices also "good news"? My buddy who works at Exxon sure thinks so, but I'm not exactly sure why his position would win the support of Business Insider. Are rising health care costs also "good" news? I'm sure the folks over at Pfizer think so, but I must have missed your glowing article, Sam. But Real Estate inflation is apparently different. Inflation in this essential asset is something to croon about. The banks certainly have won the propaganda war, along with the builders and Realtors, have they not? They've even got relatively low-paid journalists carrying their water! Let's be clear: House price inflation is devastating to an economy over the long term. It turns hard working people into life-long debt slaves. It decimates disposable income. And it severely curtails investment into actual productive industries and enterprises by locking capital into non-productive assets. Please exercise a little logical thought, Sam before joining the chorus on CNBC. Rising house prices are disastrous to the economy. barbacoa Sun, 02 Feb 2014 02:00:32 -0500 Shadow inventory is a BS statistic when used as a general indicator. It's thrown around like it provides some uniform measurement of housing everywhere, just waiting to be dumped on the market. The reality is, it all depends on where you live. For instance, there are huge percentages of foreclosures to clear through the system in FL, and to a lesser extent, NY and NJ.. But many other states are not in that position. Certainly not where I live. Additionally, many of these homes in the shadow inventory will remain with the current owner, as they work out a long term solution with the lender. I'm very familiar with my market, but not so much with the specifics elsewhere. But I'd wager a guess that many of the homes in the shadow inventory are dilapidated structures that will be torn down, or just left to decay away. JOHNNY HOTCAKES Sat, 01 Feb 2014 23:33:34 -0500 Barclay's has NO credibility whatsoever so I would take this shadow inventory report with a grain of salt. The Federal Reserve is keeping these properties off the market, not the banks. The banks and FR are manipulating the inventory of foreclosed homes. It's more than that 2.3M that Barclay's is reporting. It's probably double that number. Never trust government statistics!