Distressed Inventory Report 5-22-10
Here we go. Definitely seeing an up trend. The amount of foreclosed homes is not spiking but the notice of trustee sales (NTS) are steadily increasing. In the weeks before we saw maybe one to to new NTS and in many cases the amount of homes selling was offsetting the new NTS. Not the case anymore. It appears that the sales of the foreclosed homes have slowed down and the NTS homes are coming to the market at about 4 to 5 a week in each area and then throw in a couple of projects that are going to auction and you have steadily increasing distressed inventory.
In the last cycle last year we saw prices soften until the inventory peaked and then declined. The best buys were on the backside of the decline in distressed inventory just after the peak. The overall economic news will keep rates lower and jobs seem to be going nowhere for now so I don’t see much upward pressure. The issue now is there is almost no new inventory and most of the inventory is now resale. In my opinion this means two things. The first is that if you are a and have a resale home fix it up as close to new as possible to get a jump on the competition. This will give you an edge over the short sales and bank owned homes that need a lot of work. Then price accordingly just because you have seen a number of homes in your neighborhood sell don’t delude yourself into thinking you will get any premium. You are going to struggle to get the sale.
If you are buyer don’t over estimate the amount of competitive buyers that come out of the woodwork all of a sudden for a good home at a good price. I see this happen over and over a few smart sellers price to sell and nothing else sells but there is a multiple offer situation on that one house. The reason is there is no shortage buyers but they will only pay a certain price and are very discretionary. My wife just went through this process. A buyer she had been working with for almost two years finally purchased a home. However the home was in good condition and priced well below the competition at almost $20 per sq. ft. less but at the average per sq. ft. sale price for the neighborhood last year. There were three offers on it two days and the home went for $5,000 over the list price. If he would not have received this obvious value he would have just stayed put. This will be the nature of the market for the next couple of years.
The spreadsheet is here: Bellevue Foreclosure Report 5-22-10