SHADOW INVENTORY OF BANK OWNED HOMES- MYTH OR REALITY-METRO PHOENIX
SHADOW INVENTORY OF BANK OWNED HOMES- MYTH OR REALITY-METRO PHOENIX
Hi this is Jeff Cameron from MRW Homes here is Scottsdale Arizona.
Today we are going to look into more detail about the Shadow Inventory of Single Family Residences and how we can keep an eye on it. We will look at the process from late to foreclosure, the size and changes of each stage and after reviewing the numbers you will know there is no Shadow Inventory in Metro Phoenix. You will also know how to determine if Foreclosures will escalate or continue to decline.
But First! Welcome to Fall in Arizona. I am here at my new office at McDowell Mountain Suites. We are now located at 16420 N. 92nd Street, unit 219. Just behind the Ice Den in north Scottsdale off of Bell Road and 101 Freeway.
Check out those views of the McDowell Mountains. I love it! To my friends in the cold climates, we are looking at 6 months of beautiful weather here in the valley. Homes are at fire sale prices, call me today to reserve your winter, second or investment home. These discounted prices will not last long.
The process for a homeowner to go into foreclosure here in Arizona:
First, they are late on their mortgage. But not everyone is going into default just because they are behind on their mortgage.
Once the fall behind at least 90 days, then the bank Schedules Trustee Sale. If it does go to the date of the trustee sale, one of 3 things will occur. The sale of the home will be either canceled, sold at trustee sale to an investor or it will go back to the bank.
Properties that go back to the bank are put in the process to be liquidated or sold to the public. This is where the public has such a misconception or at least here in Arizona.
The 3 categories for the bank are:
Owned but not yet listed for sale.
Available bank properties for sale / REO.
Pending REO’s, which are homes under contract with a buyer heading to closing.
So, the Late on their mortgage category is now at 7.5% of mortgages down from over 13% a year ago. Almost half as many as last year. Less people are delinquent on their mortgage. These are the people that feed to Scheduled Trustee Sale or Short Sale.
Next, we have Scheduled Trustee sale. They account for 3.5% or about 24,000 borrowers, down from over 50,000 a year ago. This is the most important number. You see, for more foreclosures to flood the market, you would need more borrowers behind on their mortgage. It is possible this will increase. But as it increases it will take another 90 days minimum for those properties to reach the market as foreclosures. Therefore, if we pay attention to this number, this stat. It will tell us the future of foreclosures or potential foreclosures. Currently this number has been decreasing each month. It would need to grow greatly for there to be any flood to hit the market. Each month new people go into foreclosure, but also homes are sold as Short Sales, modified, or foreclosed on.
Last month about 3,000 homes were either foreclosed on or bought at the trustee sale. The pipeline into REO is decreasing. Only 1,500 homes were listed for sale by banks in October.
Owned but not listed is about 9,000 down from 14,000 last year. These are homes in the process to get listed. This is the REAL Shadow Inventory. You know, homes owned by the bank but not yet on the market. I have heard dooms dayers say this number was huge. I believe they look at national numbers and compare to local. This way over states the problem. This level is not high. Remember, with any product, there will be a pipeline. With houses owned by the bank, the homes are in the process of evicting occupants, cash for keys, trash outs, repair bids and repairs conducted; along with Broker Price Opinions and Appraisals. These are all done prior to listing the home for sale, therefore, there should be 3 to 6 months worth of sales in the Works In Process.
Bank Owned/REO and listed for sale is 2,088 valley wide. This is down from over 7,000 a year ago. Again, another statistical fact the REO inventory is declining.
Bank Owned and PENDING or under contract is at 2,825 in metro Phoenix. This number is down from over 5,000 in the past year. These are the REO homes that have accepted a contract from a buyer and are in the process of closing escrow.
All together we have about 14,000 Single Family Residences currently owned by the bank in the metro Phoenix and Scottsdale. I am not counting land, condos or the like in this number. I am staying consistent with all numbers being single family residences.
With all the bank owned homes valley wide consisting of a little over 2 months of total demand here in the off season and about 1.5 months of supply based on the high season. While we would like to see this much lower, it is not a large number. Therefore, there is no flood of Shadow Inventory coming to the market.
Just my opinion, but based on facts.
Jeff Cameron
MRW Homes
480-502-7699
Call me today
480-652-2004