Distressed Inventory Report 4-10-10
Another increase this week in Distressed Inventory. East Bellevue is at an all time high with 138 homes and West Bellevue saw Frontier Bank take back a couple of projects so it saw a spike in inventory. South Bellevue was the only area to see a decrease. What is interesting is to see is some of the Zillow graphs and the Altos graphs which are showing mild price appreciation. Increasing distressed inventory will only hold prices flat or even put downward pressure if sales slow down. Bottom line is that it is real hard to have much pricing pressure in an economy with 10% unemployment and massive under employment. Lenders are slow to bring homes to the market so in another 30 to 60 days you should see the amount of listed bank owned homes coming to the market.
My personal feeling is that we will still end the year with a mild price increase but as I said before the prices will probably dip a little bit as the “hangers on” get no help from a tepid economy and just cannot hang on any longer. At an antidotal level this is what I am seeing is that people with resources have drained those resources and were hoping for a break and just have not recieved that break. These homes need to be worked through the system. Hopefully that will occur over the next few months but the people in those homes that are trying to hang on and do the right thing deserve something much better than “health care”. Corporate taxes should be lowered and companies should be allowed in the next couple of years to expense capital purchases in one year. However the bonuses the bonuses at financial insitutions that received TARP or any form of governemt financial guarantee such as deposit insurance should be taxed. If someone’s bonus excceds 35% of their income then the incentive becomes too great to enter into risky behavior particularly at financial insitutions. If a company has some form of a government guarantee then any bonus over 35% of the income should be taxed at a rate 75%. This will make the boards readjust pay to a larger base salary and actually assess the risk levels of the market they are in, in order to revise the pay and see if the salary paid is sustainable. If Goldman Sachs complains they can go back being a true investment bank and actually do investment banking in companies rather than taking government insured deposits and trading currency, commodities and debt securities.
Here is the spreadsheet: Bellevue Foreclosure Report 4-10-10