Posted on Thursday, March 24, 2011
All indicators MOM and YOY are (1) moving in the wrong direction (2) for enough time to be called a trend.
Another trend is spreading to other states; . others included in ‘top’ foreclosure states now (CA,FL,AZ,MI,GA,TX,IL,NV,OH,WI). Prices were down in 18 states 6 months ago. Now 45 states.
MOMENTUM MEANS TRENDS WILL CONTINUE.
Even with foreclosures (temporarily due to robo signers – major lenders residential foreclosures on hold months now) down there were still a quarter million last month.
Construction down over 20% so new sales will stay down – 3/23 for Feb down MOM 16.9% YOU 28%.
Pending sales down several months.
Probably worse than we thin; NAR numbers contested for being too optimistic.
Discounts on distressed sales are growing. 2008 26%. 2009 30%. 2010 37% and the shear volume of these transactions is at 39% - both due to number of foreclosures/distressed inventory and lack of traditional buyer purchasing non-distressed properties to keep average values up.
Traditional supply and demand challenges compounded by the wrong kind of supply and demand.
Inventory is probably much higher than the 8/6 months estimated. Per MBA, shadow in most areas will take 10 to 20 months to work through.
As long as prices keep going down, fear and appraisals will be obstacles.
ONE SAVING GRACE Rental prices keep going up. $28 to 40K per unit. Rent to own ration favors buying in 72% markets. Demographic shift life long renters buying. But also visa versa.
Need ‘price guaranty.’
BIGGEST CONCERN – LOOKS LIKE NO ONE KNOWS HOW TO FIX
Delaying foreclosures is not working. Courts running out of money. Defaults dragging the rest of us down with them.
Programs cancelled last week including HAMP. Nothing to replace them.
So far programs haven’t worked. Example: Tax Credit, HAMP, and now AG La La Land “Settlement Terms”
• No authority. Tried with pursuing law firms – Bar and Courts said no. Now going after banks.
• Turned robo signer investigation into settlement on modifications, write downs, MERS. Why not suggest how to fix Japan’s nuclear disaster while we’re at it?
• Set up banks to fail, lawyers to milk the system (time frames, documents, etc) - foreclosures to drag out – burden courts, municipalities, all of our property values, references to HAMP (now gone), years and millions to implement, change bank culture – reason it is this way, modifications forever increase risk and costs to all of us, all very naïve.
• State government really telling anyone how to deliver a decent and fair customer experience?
• Don’t even know who is really hurt here (Rules broken were to protect banks!). How can we form a solution when all problems are not defined? FNMA disclosures and innocent buyers. If anything, create recovery fund.
• Doesn’t address real issue. Already HAD laws. Robo signers broke them – put integrity of entire system into question. How punish these mills, create disincentive to happen again, fix low fixed price and deadlines compared to high work required to handle these cases (have to hire untrained staff and cut corners – can argue quick cheap foreclosures benefit homeowners); example foreclosures done differently in every state and circuit. MERS and securitization process. Financial illiteracy – how much can we expect from borrower to protect themselves? Holding banks responsible to educate us and for the outcomes that happen when we’re not is not appropriate.