Flat Housing: A Good Thing?

I was watching a segment from MSNBC about the most recent S&P/Case Schiller housing report and the findings are that we are in a flat housing market based on Sales price. Locally, Alameda has been in a flat market since at least May in terms of inventory and median home prices.

The key according to the experts is inventory and how quickly the bank unwind their holdings of foreclosed properties. Susan Wachter, a real estate professor at Wharton, and Patrick Newport, of IHS Global Insight, discuss whether a flat round of S&P/Case-Shiller numbers is good for home prices in 2010. Newport was negative about the housing market, he believes that home prices will continue to fall because one in four homes is underwater (the borrower owes more than the house is valued) and record foreclosures.

Many in the industry have been predicting a new wave of foreclosures in 2010 and according to Newport the only way to unwind the inventory is to lower prices. This shadow inventory has yet to reveal itself, according to RealtyTrac Alameda has 103 properties in pre-foreclosure, 77 auction properties, and 80 banked owned properties. Since Alameda only shows 12 foreclosures for sale there is a big gap between the listed and held properties by the banks.

Even Newport does not believe that it will be a large decline in prices because most markets have already fallen to apparent bottoms. The SF Bay Area has seen rising prices and multiple offers back, much depends on what the back do in the first half of 2010.

The segment is worth a watch. Sorry about the link the embed code was not working

http://www.msnbc.msn.com/id/21134540/vp/34622689#34622689

A 40 Percent Rise in Alameda Foreclosures

Last week, Alameda saw a rise in foreclosures listed on the Multiple Listing Service (MLS) after nearly three weeks of no inventory being added to this segment of the market.

The market added five foreclosed listings in five days. The newly listed properties are all single family residences and range from $422,500 to $589,900.

The properties are:

• 1427 Bay Street -- a two bedroom, one bathroom home listed for $424,800
• 1549 Bay Street -- a four bedroom, two plus bathroom home listed for $424,800
• 1528 Pacific -- a two bedroom, one bathroom home listed for $422,500
• 1009 Central -- a four bedroom, two bathroom home listed for $460,750
• 3246 Garfield -- a three bedroom, two bathroom home listed for $589,900

The increase from last weeks nine properties to today's 15 is a 40 percent increase. This is a big swing in the number and is very concerning. I wrote about Shadow Inventory back in May and was concerned that a large number of foreclosures may hit the Alameda market.

Back in May we saw: RealtyTrac, a search of foreclosures for Alameda show that there is a looming group of homes ready to hit the Island’s Real Estate market. The Website list 93 homes in Pre-foreclosure. The owners have received notice of default, but have not yet been foreclosed. The Pre-foreclosed homes is more than half of what is currently listed on the Multiple Listing Service (MLS). Add to that 53 listed for Auction and another 75 Banked-Owned and that is 221 properties that could add to the rise in inventory.

Today the Island has seen a decline in inventory, but the RealtyTrac numbers continue a significant number of homes in distress.

The Website list 98 homes in Pre-foreclosure and increase from May. Those 98 homes in pre-forclosure are families that are behind on their payments and give the job market many people may continue to struggle to pay. Add to that 71 listed for Auction and another 85 Banked-Owned and that is 254 properties in total. So over the course of the main home selling season we have seen a 13 percent increase in distressed homes.

Not sure what this means in the short term, but my guess is that it will continue to put pressure on home prices, driving them down, until banks clear these properties from their books. The numbers also show that Alameda home owners are having a tough time paying the mortagage.

Alameda Inventory -- Week of September 21

. . . 9/21/2009 . Total 135 . 94501 111 . 94502 24 . SFR 91 . Condo 24 . Multi-Family 18 . Short Sale 11 . Foreclosure 15 . Price Reductions $47 . High List $1,899,000 . Low List $229000 .

The Shadow Knows

The talk around the Real Estate industry for months has been about shadow inventory. This is inventory of unsold homes that has been kept from the market for several reasons, mostly because banks do not have the resources to handle all of the foreclosures. Information I gleaned from Zillow and RealtyTrac show that the Alameda Real Estate Market may have some hidden inventory.

Zillow is reporting that a big group of homeowners have been trying to wait out the downturn in the market and are ready to sell. “Almost one-third of homeowners (31 percent) said they would be at least somewhat likely to put their homes on the market in the next 12 months if they saw signs of a recovering real estate market,” according to Zillow’s first quarter Homeowner Confidence Survey. “Maybe these homeowners have outgrown their homes, or are dreaming about living in a new neighborhood or town, but don’t like the prospect of selling in the current market.”

The shadow inventory can result in a slower recover.

“This “shadow inventory” will likely be one of the contributors to a recovery that is more “L”-shaped than “V”-shaped. As sales rise and inventory is cleared off, many homeowners will start to test the waters again by putting their homes on the market, thus keeping supply levels higher than they would be without this pent-up inventory. These sustained supply levels will serve to keep downward pressure on prices, which can only increase as demand begins to outstrip supply,” wrote Zillow’s Vice President of Data and Analytics Stan Humphries.

Over at RealtyTrac, a search of foreclosures for Alameda show that there is a looming group of homes ready to hit the Island’s Real Estate market. The Website list 93 homes in Pre-foreclosure. The owners have received notice of default, but have not yet been foreclosed.
The Pre-foreclosed homes is more than half of what is currently listed on the Multiple Listing Service (MLS). Add to that 53 listed for Auction and another 75 Banked-Owned and that is 221 properties that could add to the rise in inventory.

The MLS shows eight foreclosures and 21 short sales listed. If we subtract that out of the Realty Trac numbers that leaves a 192 properties that have yet to hit the open market.

Alameda Inventory as of Sunday May 17, 2009

. 5/17/2009 . Total 168 . 94501 130 . 94502 38 . SFR 102 . Condo 36 . Multi-Family 28 . Short Sale 21 . Foreclosure 8 . Price Reductions 61 . High List $2345000 . Low List $162900 .

Link to Lager Chart

Zillow Report http://www.zillow.com/blog/when-the-bottom-arrives-a-flood-of-shadow-inventory/2009/05/19/