“Thousands of homes are on the market in the Baltimore region. But as the commercials say, wait — there’s more.

Tens of thousands of Baltimore-area homeowners are [...]]]> An article in the Baltimore Sun reported that, according to John Burns Real Estate Consulting, Baltimore’s “Shadow Inventory” of homes may be in the 50,000 range:

“Thousands of homes are on the market in the Baltimore region. But as the commercials say, wait — there’s more.

Tens of thousands of Baltimore-area homeowners are behind on their mortgage payments. At least some of their homes will end up on the market too, either as short sales or repossessed foreclosures.

California-based John Burns Real Estate Consulting, which does market research for homebuilders and banks, estimates this “shadow inventory” in the Baltimore region at 50,000 homes as of June. That’s how many properties the company believes will eventually become distress sales but aren’t yet listed.

“That equates to 14 months of supply based on the average resale sales volume for the area over the last 10 years,” Wayne Yamano, a vice president at John Burns, said in an email. “The U.S. average is about 9 months of shadow inventory in comparison.”

As Baltimore’s real estate market has historically been a good barometer of Ocean City’ market, it leads one to wonder what the “Shadow Inventory” number for Ocean City Maryland might be.

The full article –

http://weblogs.baltimoresun.com/business/realestate/blog/2011/09/firm_baltimorearea_shadow_inventory_at_50000_homes.html

“In July, Inside Mortgage Finance (or IMF) reported in its monthly Housing Pulse Survey report that 75% of investor purchases nationwide in June were all-cash transactions. These investors [...]]]> Business Insider has an excellent article, with strong analysis, commenting on the unprecedented cash buying trend we have seen since 2008. Just look at this stat:

“In July, Inside Mortgage Finance (or IMF) reported in its monthly Housing Pulse Survey report that 75% of investor purchases nationwide in June were all-cash transactions. These investors focused their attention on what IMF calls “damaged REOs.” The June survey revealed that 59% of damaged REO sales were to investors.”

Did I read that right? 75% of investor purchases were ALL CASH.

This article is worth a read, especially if you are an investor and your thoughts are to “beat” the yield of your local bank thu a real estate cash purchase.

The full article –

http://www.businessinsider.com/all-cash-buying-signals-demise-of-normal-housing-market-2011-9#ixzz1YPxdD3tD

“Third-party investors are much faster at reselling foreclosures than banks…

‘Our statistics clearly show that real estate investors continue to far outperform banks in dealing with distressed properties,’ said Sean O’Toole, CEO and founder of ForeclosureRadar.”

“Outperform”?

As buyer agents [...]]]> DSNews.com and ForeclosureRadar are reporting what many “on the ground” have observed for some time:

“Third-party investors are much faster at reselling foreclosures than banks…

‘Our statistics clearly show that real estate investors continue to far outperform banks in dealing with distressed properties,’ said Sean O’Toole, CEO and founder of ForeclosureRadar.”

“Outperform”?

As buyer agents we have observed that without a doubt, distressed investor properties are easier to work with, faster, and often better priced than bank properties.

The full article –

http://www.dsnews.com/articles/investors-outdo-banks-offloading-distressed-properties-report-2011-08-11

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But what does this mean for “strategic defaults”?

An excellent article addressing this question appeared recently [...]]]> There has been much written in the last couple of weeks about the latest National quarterly home value numbers. None of it good.  Many people are coming to realize that we may very well see even lower prices in the future.

But what does this mean for “strategic defaults”?

An excellent article addressing this question appeared recently in the Wall Street Journal. It looks at data provided by the Federal Reserve Board (FRB) to draw some rather alarming conclusions:

“The implications of this FRB report are really grim. Keep in mind that 80% of the 133,000 no-down-payment loans examined had gone into default within three years. Clearly, homeowners with no skin in the game have little incentive to continue paying the loan when the property goes further and further underwater.

Here is the most ominous statistic of them all. In my article on the looming home equity line of credit (HELOC) disaster posted here in early September Home Equity Lines of Credit: The Next Looming Disaster?, I pointed out that there were roughly 13 million HELOCs outstanding. This HELOC madness was concentrated in California where more than 2.3 million were originated in 2005-2006 alone.

How many of these homes with HELOCs are underwater today? Roughly 98% of them, and maybe more. Equifax reported that in July 2009, the average HELOC balance nationwide for homeowners with prime first mortgages was nearly $125,000. Yet the studies which discuss how many homeowners are underwater have examined only first liens.” (emphasis added)

Did we read that right?  All of this talk about “underwater mortgages” we have heard to date addresses only the impact of FIRST LIENS? Yes, I’m afraid so:

“So if you’ve read that roughly 25% of all homes with a mortgage are now underwater, forget that number. If you include all second liens, It could easily be 50%. This means that in many of those major metros that have experienced the worst price collapse, more than 50% of all mortgaged properties may be seriously underwater.” (emphasis added)

So what does this mean for the projected number of  future “strategic defaulters”?

“What seems fairly clear… is that as home values continue to decline and loan-to-value (LTV) ratios rise, the number of homeowners choosing to walk away from their mortgage obligation will relentlessly grow. That means growing trouble for nearly all major housing markets around the country.”

The full article –

http://www.marketwatch.com/story/strategic-defaults-could-get-very-ugly-2011-05-04?pagenumber=2

“With the expiration of the first-time buyer tax credit on April 30, there are now two main props keeping the housing [...]]]> Business Insider is reporting what many believe is happening nationwide and what could have a profound impact on Ocean City Maryland’s future real estate inventory of homes and condominiums for sale:

“With the expiration of the first-time buyer tax credit on April 30, there are now two main props keeping the housing market afloat.  One is the growing percentage of home sales financed by Federal Housing Administration (FHA) loan guarantees.  The other is the refusal of banks to put on the market foreclosed homes over $300,000.

Will this bank strategy keep the market for homes over $300,000 from imploding?  Not a chance.

Housing markets throughout the United States for $300,000+ homes are in for rough sailing and prices are extremely likely to be headed for a real plunge.”

The full article –

http://www.businessinsider.com/banks-cant-hold-back-highend-mortgage-repos-for-long-2010-7

“In a sign that the housing market has taken another turn for the worse, a new report shows almost a quarter of all home listings in the [...]]]> Time.com is reporting another incredible bit of housing news yesterday. Bad news for home sellers, but good news certainly for prospective home buyers with patience:

“In a sign that the housing market has taken another turn for the worse, a new report shows almost a quarter of all home listings in the U.S. had at least one price reduction in June.

The price cutting is widespread too. The report, released Wednesday by residential real estate tracking firm Trulia, shows 21 of the country’s 50 largest markets cut prices on at least 30% of their listings, up from 10 markets in May.”

When home buying in this market, research and patience can payoff big time.  Also consider enlisting the help of a seasoned exclusive buyer agent who owes their full loyalty to you such as  HomeBuyerPower®  with your search.

The full article –

http://www.time.com/time/business/article/0,8599,2003578,00.html

“For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but [...]]]> Another article found today about how clever it is not to pay your mortgage, and how we may be in for a VERY, VERY LONG ride to home price and mortgage stabilization in America:

“For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of.

Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.

The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics.”

The full article –

http://www.nytimes.com/2010/06/01/business/01nopay.html?hp

“During the first three months of this year, RealtyTrac’s data shows there were 257,944 properties repossessed by the lender – an increase of 9 percent from the previous quarter and an increase of 35 percent compared to the first quarter of 2009.

All [...]]]> DSNews.com is reporting that the foreclosure tide is still rising:

“During the first three months of this year, RealtyTrac’s data shows there were 257,944 properties repossessed by the lender – an increase of 9 percent from the previous quarter and an increase of 35 percent compared to the first quarter of 2009.

All foreclosure types spiked in March. Filings were reported on 367,056 properties last month, an increase of nearly 19 percent from the previous month and the highest monthly total since RealtyTrac began issuing its report in January 2005.”

The full article -

http://www.dsnews.com/articles/foreclosure-activity-increases-7-in-q1-realtytrac-2010-04-15

“Locally however, Worcester County is below both the state and national average for foreclosure properties, but, according to Robert Smith, [...]]]> The Maryland Coast Dispatch had an interesting article this Friday about the impact of, what might be, a potential tsunami of Ocean City Maryland resort condominium and home foreclosures and REOs in the future:

“Locally however, Worcester County is below both the state and national average for foreclosure properties, but, according to Robert Smith, supervisor of Worcester County Assessments, there is reason to be concerned on both the short term and the long term, as far as what your house is potentially worth.

“Foreclosures aren’t the driving force yet when it comes to what properties are being assessed at, but it could very possibly end up that way if things don’t improve,” said Smith. “Right now, foreclosures are looked at, but not factored into the equation when we are assessing a property, but that could change if numbers continue to rise.”

To date in 2010, 22 of the 113 condominiums (excluding new construction) that have been sold so far are foreclosed properties.

In Ocean Pines of the 25 single-family homes that have sold this year, five were foreclosures.

Smith says that buyers are in some cases, opting to drive the price down during negotiations based on the foreclosure or short sale properties in the neighborhood or area. He says that even though real estate numbers are starting to pick up, the price that properties are being sold for will have long-term effects on future assessments and tax revenues.”

The fall of prices and the effects of REOs and foreclosures, for anyone who is considering buying an Ocean City Maryland area property, will probably be the biggest story of this decade– just like price increases during the bubble were the biggest story of the last decade.

Stay tuned. This story has a number of chapters left.

The full article–

http://www.mdcoastdispatch.com/article.php?cid=37&id=8484

“A contagion effect within communities is leading borrowers to consider default as an acceptable option in the face of financial hardship, Fannie found. Both delinquent and current mortgage borrowers are more than twice as likely to have seriously considered [...]]]> HousingWire.com is reporting that more borrowers are increasingly planning “strategic defaults” with their housing debt:

“A contagion effect within communities is leading borrowers to consider default as an acceptable option in the face of financial hardship, Fannie found. Both delinquent and current mortgage borrowers are more than twice as likely to have seriously considered stopping payment if they know someone who has already defaulted.”

But according to the study, thinking about walking away and actually walking away are two different things:

“Despite a growing acceptance of strategic default on the community level, thinking about walking away and actually walking away are separate events, according to Kathleen Day, a representative at the Center for Responsible Lending.

“From everything we know, no one defaults if they could possibly stay in their homes,” she tells HousingWire. “We just don’t see people responsibly walking away. It’s people who are at the end of their economic rope.”

The full article–

http://www.housingwire.com/2010/04/06/fannie-mae-sees-strategic-default-on-the-minds-of-underwater-borrowers/