QUESTION FROM NEWSLETTER READER 5/21/12:
I wonder if you could give your thoughts on the amount of “shadow” inventory for the south bay. I guess shadow inventory would include REO, pre-foreclose, & short sale. Why is inventory so low?
Hi READER – without my crystal ball, I cannot say for sure but my “thoughts” are, from all I have heard in the industry, that we are in for another 4-5 years of upside down mortgages in the valley. There are 1 million people in San Jose, and 1 out of 5 is either behind on their mortgages or close– that equals 200,000 homes. Banks have been holding onto the inventory because of the robo-signing investigation and now that it is over, we hear they are going to be releasing them soon.
Rumor has it that some of the big banks are starting to do what they should have long time ago and that is to try to help the homeowners hang onto the houses instead. IF that works, some people are going to hang on for as long as they can to see if they can get some of that help.
Bank of America is offering to pre-approve short sale prices to speed up that process and also offering a possible $2,500 to $30,000 for relocation expenses; Chase has a similar program and I have seen $20,000 given to the seller in escrow at a short sale close.
An economist I heard just recently said that we are NOT going to see the inventory from the bank increase our inventory and then I read another missive online yesterday where a different economist said we ARE going to see the inventory soon. So bottom line is there is no concrete answer.
Inventory is also low because homeowners see their equity affected by the short sales and REO’s in their neighborhood and do not feel it is a good time to sell. With the recent reporting of multiple offers, more sellers are going to reconsider and we should start seeing more inventory soon – along with the homes that go on the market when kids are out of school and parents want to move to another school district before school starts.
Dawn O’Neal & Tom Binder
Broker/Owner & REALTORS®
Check out my BLOG at Dawn O’Neal – Experienced California REALTOR®
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