Monday, June 10, 2013

Foreclosure Ninjas and Shadow Inventory

Under the stealth of cloaked balance sheets and un-realized transactions, our nation is being overrun by foreclosure ninja.  It was reported in DS News that between GSEs like Fannie and Freddie and separately by HUD, that 1.7 million properties are in the shadows.  This number is in addition to the nearly 200,000 properties that are held as REO properties ready for sale by the GSEs and HUD.
infiltrated by the shadow inventory of properties held by banks, GSE's and HUD that are more than 90 days in arrears but not yet in foreclosure. 

A corollary article stated that year over year, the Washington market has seen a jump in foreclosures by 67 percent in the Seattle-Tacoma-Bellevue metro area.  If we only worried about the metro, we would be neglecting the fact that foreclosures have reached far into suburbia and the rate for the entire state is 88% above last year's numbers.  Now you may wonder, how in the world could we as Washingtonians be facing such horrendous news when we have clearly seen a year over year increase in values?

The Wall Street Journal on Sunday ran an interesting article that hit on some of the reasons why we are seeing these dichotomous events here in Washington.  Corporate purchasers are entering the market in numbers that belie the significance of the collective impact on the housing market.  Simply put, as that last sentence was full of legal speak, the corporate buyers are only buying a few home, but those purchases are significantly swinging prices.

So what does that mean those that are sitting on a home right now?  It means that in the short term, your home value is going to increase.  It means that in the mid term you could see a dramatic change in value of upwards of 30%.  If you don't believe me, and there isn't really any reason that you should, so check out Mr. Harry Dent, I know I would change my name too.

The recovery that is a buzz in the markets is smoke, the un-foreclosed homes, the shadows, and the ninja silently stalking in and out is a second downturn.  Smart investors, homeowners, and businesses will trim debt while they can, cinch the belt and look for opportunities that will grown in down markets.  Even sneaky foreclosure ninjas can be beat with understanding where the smoke and shadows are and employing a comprehensive strategy for defeating them.

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