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Melanie Gonzalez' Blog

Relevant Real Estate Tid Bits... THE SHORT & THE LONG of it!

By Melanie Faith Gonzalez | Agent in Palm Springs, CA
  • “Relevant Real Estate Tid Bits- THE SHORT and THE LONG of it!”

    Posted Under: Market Conditions in Los Angeles, Home Buying in Los Angeles, Home Selling in Los Angeles  |  May 2, 2013 9:52 AM  |  139 views  |  No comments

    http://www.forbes.com/sites/afontevecchia/2013/04/30/home-prices-growing-at-pre-bubble-rates-on-bernanke-boost-but-big-shadow-inventory-lurks/


    If you have been looking for properties over the past couple months you know that multiple offers are way more common then not!   Prices are going up but you can still get a good deal!
  • Relevant Real Estate Tid Bits- THE SHORT and THE LONG of it!

    Posted Under: Market Conditions in Los Angeles, Home Selling in Los Angeles, Foreclosure in Los Angeles  |  September 7, 2012 8:18 AM  |  193 views  |  No comments

    THE SHORT:

    The latest buzz word and concept of "shadow inventory" shouldn't undo the recent recovery we have been seeing.  Why? Similiar to a savy investor that diversifies his/her portfolio and if some assets underperform the others can make up for the loss.   This shadow inventory can be looked at in much the same way. Timiraos describes this 'counterbalance':

         It’s concentrated in a handful of markets—it isn’t inherently a national phenomenon. It is            being offset by improved demand, particularly from investors. And the housing vacancy rate is       low, a product of very little new home construction over the past few years that could                     counterbalance continued high inventories of foreclosed homes.

    THE LONG:

    Shadow Inventory: It’s Not as Scary as It Looks (Wall Street Journal)

    By Nick Timiraos 

    The housing market is improving because there are more buyers chasing fewer homes. Skeptics of a housing bottom, however, often point to a scary set of numbers: the “shadow inventory” of potential foreclosures—the millions of mortgages that are either in foreclosure or in default.

    It’s true that home prices are unlikely to see brisk gains once they do hit bottom because it will take years to absorb this glut. But will this phantom inventory derail the incipient housing bottom?  Maybe not, say a number of housing analysts.

    There are several reasons why the shadow inventory isn’t as scary as it sounds: It’s concentrated in a handful of markets—it isn’t inherently a national phenomenon. It is being offset by improved demand, particularly from investors. And the housing vacancy rate is low, a product of very little new home construction over the past few years that could counterbalance continued high inventories of foreclosed homes.

    We’ll address each of those in subsequent posts. But first, let’s examine the actual size of the shadow inventory. While the shadow is very large, one often-overlooked fact is that the shadow isn’t nearly as large as it was two years ago.

    There are a wide range of estimates of shadow inventory. A common measure are loans that are either in the foreclosure process or that are three months or more delinquent. These are mortgages that are among the most likely to ultimately become bank-owned properties.

    Barclays Capital estimates that at the end of May there were around 1.8 million mortgages in the foreclosure process and another 1.45 million where borrowers have missed at least three payments. That puts the total number of properties that could be repossessed and resold by banks at around 3.25 million mortgages.

    Associated Press‘The concept of a huge shadow inventory is preposterous,’ says one economist.

    If those homes hit the market all at once, housing would be in deep trouble. Last year, for example, there were 4.4 million sales of previously owned homes. The figure is still higher than any time before June 2009.

    But it is down from a peak of 4.25 million in February 2010. And unless mortgage delinquencies begin to accelerate sharply, the shadow inventory won’t be growing. Barclays estimates that at the current rate, this figure could fall to around 2.4 million loans.

    “The concept of a huge shadow inventory is preposterous,” says Christopher Thornberg, a housing economist with Beacon Economics in Los Angeles. “The number of mortgages in distress is way down from one year ago. It’s clear there are fewer distressed properties out there.”

    Housing analyst Ivy Zelman has a slightly larger estimate of shadow inventory—around 6.3 million homes at the end of last year—that includes more newly delinquent mortgages and potential re-defaults. She says that in a normal market, there’s a comparable shadow inventory of 2.9 million homes. So the key figure—the excess level above the historical trend—is around 3.4 million homes.

    Ms. Zelman published an in-depth research note earlier with the title: “Shining a bright light on the shadow: Why what’s lurking doesn’t concern us.” In it, she explains how it’s more important to focus on the pace at which foreclosures are being liquidated, and not the absolute number.

    “Just like the Wizard of Oz, shadow inventory is not very intimidating once you pull back the curtain,” the report said. That isn’t to dismiss the magnitude of the problem and headwind it will continue to pose for any housing recovery, she wrote. “The bathtub is almost full, but the water has stopped rising, and we are most concerned with how fast it drains.”

    Certainly, there are many other  risks to housing. There are at least 11 million homeowners that are underwater, owing more than their homes are worth. There are even more than that who don’t have enough equity to make a 10% down payment on their next home, plus pay a real-estate broker’s sales commission, in order to trade up to a bigger home or downsize to a smaller one.  And it’s still very difficult to get a mortgage.

    But the shadow inventory is often the big trump card used to quiet any housing-happy talk. Tomorrow, we’ll offer a deeper look at how demand factors into this equation, and how the shadow is being disposed.

  • Relevant Real Estate Tid Bits- THE SHORT and THE LONG of it!

    Posted Under: Market Conditions in Los Angeles, Home Buying in Los Angeles, Home Selling in Los Angeles  |  September 6, 2012 7:57 AM  |  197 views  |  No comments

    THE SHORT:

    Property values on the rise!

    THE LONG:

    L.A. Property Values Making a Comeback

    By Howard Fine Originally published July 19, 2012 at 2:50 p.m., updated July 20, 2012 at 10:43 a.m.

    In another sign of recovery in the local real estate market, property values in Los Angeles County rose more than 2 percent last year, the county Assessor’s office announced Thursday.

    The assessment roll rose $21 billion, or 2.2 percent, during the 2011 calendar year, to $1.08 trillion as of Jan. 1, according to figures released from the Assessor’s office.

    This is the second annual increase in the county assessment roll since the real estate downturn ended and was good news for cash-strapped local governments. Under Proposition 13, property owners pay 1 percent of the assessed valuation in property taxes, which is then divided among local governments and school districts. Last year, the roll grew 1.36 percent.

    “The 2.2 percent net increase is great news for all Los Angeles County residents since it means an increase in revenues for local governments and schools,” said Chief Deputy Assessor Santos Kreimann, in a prepared statement.

    The biggest factor behind the increase was the annual 2 percent inflation adjustment that’s applied under Proposition 13 to properties that didn’t change ownership last year, Kreimann said. That resulted in an additional $15 billion for the assessment roll.

    The other substantial factor was the raising to current market value of properties that changed ownership last year, adding about $12 billion. There was also about $5 billion worth of new construction throughout the county.

    Kreimann said these gains were somewhat offset by the granting of reduced valuations for roughly 365,000 residential and commercial properties, a process allowed under Proposition 8.

    The assessor’s office has been plagued by scandal in recent months as Assessor John Noguez and several of his top deputies have gone on administrative leave amid allegations that they sharply reduced valuations for property owners who contributed to his campaign fund.

 
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