We are experiencing low inventory here in Las Vegas. The decrease is a direct result from AB284 that has caused banks to stop foreclosing. Since it was passed in Oct. of 2011, REO inventory has decreased dramatically. The bill is up for reconsideration (possibly adding some amendments to allow some types of foreclosures to resume) when the Legislature meets again in Feb. 2013. It will be interesting to see the new affects on the market once additional inventory is reintroduced. I for one think the market will soften slightly but not free fall like it was before. Right now, with inventory being as low as it is, buyers are in bidding wars often times competing with more than a dozen offers. With that being said people are paying above appraisal value and homes are appreciating again at a temporary rate that is way higher than it should be. A new wave of inventory would return the Vegas market back to healthy growth with perhaps 2 or 3 offers on each property, not a dozen.
Founder of The Adams Team at Rothwell Gornt Companies and LVrealestateHELP.com
I am not seeing a huge increase in foreclosure activity at Foreclosure Radar so it will be a minimum of 1 year before we start seeing foreclosure resale listings increase. I do believe that investors will be absorbing the trustee sale inventory for several months after we see large amounts of foreclosures.
The market manipulation became official on April 5, 2012 when the Federal Reserve issued a policy statement that banks are now allowed to rent out REOâ€™s:http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20
Before April 5, 2012, banks were forbidden from renting out REOâ€™s. It was either sell and take a financial hit or keep the REO on the books and bleed money from deadbeat mortgages.
Federal law: 12 U.S.C. Â§ 29, (http://www.gpo.gov/fdsys/pkg/USCODE-2011-title12/html/USCODE ), allows banks to hold foreclosures up to 5 years.
If banks show â€œgood faithâ€, they can extend the holding period for another 5 years. In effect, withholding inventory for up to 10 years, which is what we are seeing now.
With the Fedâ€™s ZIRP program and the REO-to-rental policy, there is no reason for banks to release shadow inventory. This leads to the low inventory we are seeing now in certain markets.