Housing Crash to Resume on 7 Million Foreclosures

[Joseph Burkeson, CMI]

A mixed message for sure, here in the Tampa Area I have not performed an inspection on any homes in the last four months that weren't already bank owned or being sold as a short sale. I can't imagine that all of these short sales were computed into the foreclosure figures.

Housing Crash to Resume on 7 Million Foreclosures, Amherst Says

Sept. 23 (Bloomberg) -- The crash in U.S. home prices will probably resume because about 7 million properties that are likely to be seized by lenders have yet to hit the market, Amherst Securities Group LP analysts said.

The “huge shadow inventory,” reflecting mortgages already being foreclosed upon or now delinquent and likely to be, compares with 1.27 million in 2005, the analysts led by Laurie Goodman wrote today in a report. Assuming no other homes are on the market, it would take 1.35 years to sell the properties based on the current pace of existing-home sales, they said.

Helping to stoke speculation the housing slump has ended, an S&P/Case-Shiller index for 20 U.S. metropolitan areas showed the first month-over-month increases in values since 2006 in May and June, reducing the drop from the peak to 31 percent. Echoing other mortgage-bond analysts including those at Barclays Capital Inc., Amherst cautioned that a change in the mix of foreclosure and traditional sales over different parts of the year lifted prices in the period, as the distressed share shrank.

“The favorable seasonals will disappear over the coming months, and the reality of a 7 million-unit housing overhang is likely to set in,” they said.

The amount of pending foreclosed-home supply has been boosted by more borrowers going into default, fewer being able to catch up once they do, and longer time periods to seize properties because of issues such as loan-modification efforts and changes to state laws, the New York-based analysts wrote.

A Limited Aid

Accounting for efforts to have more loans reworked to avert foreclosure makes “not much” of a difference in the shadow inventory, with optimistic assumptions leading to a 1 million reduction in the amount, they said. “And many of these borrowers would default later, if they remain in a negative equity position,” they added.

Goodman is the former head of fixed-income research at UBS Securities LLC whose team there was top-ranked for non-agency mortgage debt in a 2008 poll of investors by Institutional Investor magazine. Amherst is a securities firm specializing in trading and advising investors on home-loan debt.

The analysts didn’t forecast home prices. The Barclays analysts including Glenn Boyd, who earlier this year wrote that once it starts, the housing recovery will be dulled by a “pent- up supply” of homes from owners who have put off sales during the slump, this month predicted 8 percent further depreciation.

That’s better than the New York-based Barclays analysts’ previous forecast of 13 percent because of their view that recent data show that the end of the crash is “decidedly under way,” they wrote in a Sept. 11 report. Foreclosed-home “supply should sap the strength of the recovery in all but the most optimistic of scenarios,” they added.

[Ed Bancroft]

All my calls have been coming from my website. The few I do get.
I agree most all are bank owned or short sale. The big problem with these have been cancellations.
1. inspection with water company lock on meter. It took 2 weeks before the water was turned on and I could return to finish.
2. showed up to do an inspection, the air handler had been stolen. I called the buyer and she asked to put it on hold. The bank agreed to replace a/c and we were back on. I would inspect minus a/c. Arrived back at property and the electric company had been out and pulled the meter! No doubt because of a/c wiring laying in the dirt.
So this one has been 5 weeks and counting.

[cjustason]

Sooo.... home sales are the only use for inspectors?

[dbelmont]

One reason I'm doing everything I can to diversify my operation (check my signature if you want to know what). Though I want to believe that we have turned the corner on the economy it's likely (IMO) that the housing market is in for another hit. I don't think we've heard the fat lady sing yet.

[Nick Gromicko]

Overall, this is good news for inspectors.

[ldapkus]

I did 4 home inspections this weekend and a $3000 property preservation job. I'm getting more preservation work on foreclosed homes that did not complete construction. The builders went belly up and walked away from the jobs. They are left unsecured, basements full of water, mold etc... lots of work needs to be done just to make sure the homes don't get worse. I charge $250 per foot to pump out basements. Sweeeeet

[Andrew Shick]

I've diversified my business as well.
I do trash outs, change locks, winterize.
Started to get some repair work on some of the houses too (bank owned, not the ones I inspect).
My inspections have tripled, and I've started providing some different services for investors.
Unless the banks start letting people live in their houses without paying for them, I'm good.

[Nick Gromicko]

Excellent news.

[Martin A. Jorgensen]

The preservation work here is picking up also and becoming a major piece of my income. It works for me, especially right now.

[Russell Spriggs]

Not mentioned here (I don't think), but still a factor-
the variable rate mortgages coming due?

[Ed Bancroft]

I have been trying to figure out how to get on vendor list for bank owned, hud, fha,
for condition reports, board ups, trash outs etc.
Home sells HI are picking up but it wont be a living for at least another year (my guess )
I posted earlier about the hassle getting bank owned HI completed. Its basicly because the bank doesnt know what is happening on the property!

Any advice on who to promote these services to?