Distressed Inventory Report 10-9-10
Distressed inventory overall took another big drop. Again where the largest declines occured was in the Notice of Trustee Sale (NTS). As an example in the 98008 zipcode this week saw another large decline from 34 homes that were NTS down to 28 for this week. The successive weekly drops in the number of NTS properties is quite dramatic. On September 18th there were 52 homes that were NTS then the next week was 39 followed by next week at 34 and this week at 28. That is a decline of 24 in four weeks. In general when drops in the NTS inventory has occured there has been a rise in the number of bank owned homes. This was the cycle in 2009 where we saw the NTS inventory swell and then the bank owned homes increased and then as the tax credit kicked in the spring of 2009 we saw those bank owned homes decline as the banks disposed of the inventory. This cycle though we do not see the bank owned inventory rising it is staying steady and also gradually declining. This means those NTS homes are getting short sold or are having loan modifications done. Antidotally I am seeing much more short sale activity in the office and on an individual transaction basis with some processing times for approval as little as 30 days and this is for homes which are not “preapproved” short sales.
There are two additional trends I am seeing. The first is that a number of “aged” short sales are capitulating to obtain a purchase and sale agreement in order to avoid foreclosure. These aged short sales are where the opportunities are. The other trend I am seeing is a reduction in the overall amount and quality of the distressed inventory. There are a few nice things at the upper end but overall the quality and desireability of the distressed inventory is in pretty sorry shape with many homes having functional defects or needing extensive and expensive repairs. The replacement inventory is not occuring.
The apreadsheet is here: Bellevue Foreclosure Report 10-9-10