Is the REO bubble over in Phoenix?

Mike Orr loves his numbers, even more than I do.  Last week he published an interesting article on “shadow inventory” on his subscription site, www.CromfordReport.com. While I could add my two cents to Mike’s analysis, I think he’s done such a thorough job that I’ll include the full article. Shadow Inventory? Some analysts have written about a so-called “shadow inventory” of lender-owned property. They speak in dark tones of an ominously vast number of properties which have been foreclosed but are not being marketed. The banks are supposedly hoarding these homes to avoid flooding the market. The implication is that when the banks finally unleash these properties onto the market we will be overloaded with supply. This is palpable nonsense. Let’s look at why the shadow inventory is relatively insignificant: First, we need to establish how many properties have been foreclosed but not yet sold to a third party. It takes much time and effort to establish this, particularly because government entities are not required to file an Affidavit of Value when they deed property. They get an “A-3” exemption. However Tom Ruff of the Information Market is up to the challenge and has counted all the trustee sales, searched for subsequent sales to third parties, accounted for all the A-3s and produced a spreadsheet of shadow inventory counts by ZIP code within Maricopa county. There are a total of 18,386 homes within Maricopa county in REO status. How many of these are in the ARMLS system as of this morning? 5,213 are active 7,170 are pending (i.e. in escrow) 477 are temporarily off market (in many cases because...

Saturday Sunrise

photo credit: Dru Bloomfield – At Home in Scottsdale I opened the blinds to a gorgeous sunrise this morning, so I dropped everything and headed out to the lake with my camera.  Great way to start the...

Home strippers hurt neighborhood house values

I’ve been working with a bank since the first of the year listing bank-owned properties around Phoenix and Scottsdale.  According to some of the other professionals that I’ve worked with (namely locksmiths and contractors), I’ve seen the best and the worst of how prior owners treat their property. Two weeks ago, one of the homes in the small community I live in was scheduled to go up for sale at the courthouse steps on Monday morning.  On Friday afternoon, two trucks showed up, with what I would speculate were “professional home strippers”.  Neighbors watched helplessly, as these people proceeded to remove the air conditioner, hot water heater, all the interior and several of the exterior doors, most of the plumbing fixtures, most of the window coverings, the carpeting, as well as all of the kitchen cabinets and appliances.  Police were called on site several times, but said that there was nothing they could do about it, since the property was still in the hands of the foreclosed homeowner. On Monday morning, as I rode by on my bike, I saw one of the guys out on the lawn, and I told him that what he was doing was a Class 5 felony.  He turned to me and told me that “the police were out three times this weekend, that they didn’t do anything, and there’s nothing you can do about it.” I was steaming.  So were my neighbors. And, I was very glad to see this article in the Arizona Republic this week: FBI cracks down on foreclosed-home strippers A task force led by the FBI has targeted distressed-property owners...

Friday Fun

My brain has been so full of real estate that it’s been difficult to write about.  I dug through my archives for this one. It is fun, and I will get back to real estate writing soon. Thanks for the...