Shouldn't Realtor Mag elaborate on the potential errors in this instead of just "forwarding" what I believe to be bad information?

For example, the very first sentence conflicts with the first sentence of the third paragraph. Which is correct "Foreclosures have been falling in recent months" or is ""Not only are current REO inventory levels elevated .."?

How does 1.7 million borrowers being delinquent compare to this time last year? That would be more telling of trends to me. Is this 1.7 million properties or if a buyer had a first, a second, and a HELOC, is the data reported as "3 borrowers"?

If we are talking about "shadow inventory" - why not balance it with "shadow buyer's"? Look at how many people lost their homes to short sale or foreclosure that are already past the time frame to "re-qualify" as buyers again!

I know bad news sells better than good news but I say "Bah Humbug"!

Jim Paulson, CRS, GRI, ePRO, SRES

Owner/Broker - Progressive Realty Corporation

Boise, Idaho

Regarding your comment about Shadow Buyers. I do not claim to know your market sir, but I can tell you that a great number of real estate agents here in South Florida will run the opposite direction of any buyer who needs financing. Cash is still king, so even if these Shadow Buyers have rebuilt their credit, they are still up against the wall as there are an innumerable amount of All Cash Buyers in the market. Combine this with, what is perceived to be a Government induced, artificial rise in asset prices; and the facts that wage growth is at a historic low, jobs are scarce for those looking & tenuous at best for those who have them; there is no hurry for anyone in the middle & lower classes to take on a major purchase like buying a home unless they can do so without the monthly obligation of a mortgage. Of the more than 200 residential buyers I have interviewed in the past year, less than 5% were requiring financing.
Your market is likely to be very different; Miami is a major international destination and has been seeing large sums of capital flowing in from Canada, Colombia, Venezuela, Brazil, Russia, France, the UK, & Germany. Given the more than 50% depreciation in the dollar we have seen over the last 10 years versus the rising strength of the currencies that are flowing in, the average American family's purchasing power simply does not support a competitive position versus the position Foreign Direct Investors are in.

Cheers,

Christopher Lazaro

I agree that cash is King but am surprised that only 5% required financing. Must be the sample of the demographic that your dealing with since it has proven that international buyer's are typically cash buyers.

Thanks for your insight!
Jim

I live in a nice neighborhood in PA built between 2006-2008 (about 75 homes total).
There are 6 vacant homes, that have been vacant for 1-3 years.
The banks should just sell these homes at a discount to families, no investors or private equity firms. Just let families buy these homes, and let's get this over with already. This "housing crisis" will last another 10-15 years at the rate it is going.

I work with large institutional buyers wielding, in some cases, billions of dollars in investment capital. I am told by the "smart money" that not all is as it seems and that the US is only about 1/3 or so of the way through the "shadow inventory" glut. There is a widely held belief that the government has brought the flow of these properties to the market down to a trickle in order to boost home prices and stage a recovery. I am also told, and this could simply be hearsay, that Fannie Mae is still sitting on over 3 Trillion USD in bad loans (i.e.: assets, essentially) and the banks, using the wide berth the Generally Accepted Accounting Principals give them, have been shifting tons of these bad mortgages around while they scramble to recapitalize. This, however, can only go on for so long and I expect at least one major bank to either fail (or have a serious problem) within the next 12 months. My sources of information are generally people who are 60+ years of age and been in the real estate investment & brokerage business for 30+ years. They cannot ALL be wrong...

Do you have any investors looking for large tracks of undeveloped property?

Time to mediate this loans before they become an Albatross on the economy.