Housing inventory is still tight, creating bidding wars and cash offers above appraised values. A New York property accommodated with only a hip-high mini fridge sold for over half a million dollars. The reason? The property faced no competition in a hot housing market. It was the sole property listed under $600,000.00 in West Village.
Listings jumped 11.3% month over month in May in Los Angeles County according to data fromRealtor.com, but is still down 37% from the sale time last year. Manhattan’s level of inventory has fallen to the lowest point in the last 13 years. The average price for a Manhattan apartment this spring was $1.425 million.
We know millions have been foreclosed upon. We know those millions of borrowers are generally unable to purchase after foreclosure for at least three years and the housing market hasn’t been all that hot (except for cash happy investors) up until the beginning of this year anyway. So where are all the houses?
According to the National Association of Realtors, only 15-20% of the homes that were foreclosed on during the meltdown were making their way to the market in 2008 and 2009. Although this “shadow inventory” is increasingly dripped onto the market as values rise, there are still 2.7 million borrowers who are currently delinquent on their Fannie of Freddie backed mortgages. Unless these borrowers are capable of repayment, are able to refinance or modify their loans, or are approved for a short sale or deed in lieu – they’ll be facing foreclosure.
One of the most common questions asked by YouWalkAway.com members is, “Why is the bid amount so high?!” Well, we don’t know, but high minimum bid amounts – set by the bank – lend to the probability that a property will revert back to the lender as REO (“Real Estate Owned by the bank) instead of being purchased by a third party. We often see minimum bids set at the amount owed on the first loan, which is usually more than the property’s current value.
Why does the bank want more properties?
Banks now control a significant slice of the inventory pie and considering that the estimated value of “shadow inventory” has recently risen from $175 billion to $205 billion, they’d rather hold onto their piece than eat it.Tweet