DataQuick release their April sales report today for CA which showed a 26.8% increase in sales over the previous month. Great news and confirms the reports I've been getting from my Realtor friends that things are picking up.
But is the worst really behind us?
Some believe so, in this CNBC report respected investment researcher Charles Biderman predicts that all the REO inventory will be gone by June. Click here to watch.
Thanks to a new addition to DataQuick's monthly CA Sales Report which tells us the percentage of monthly home sales that are bank resales, we can now quite easily see just how well banks are actually doing on getting rid of inventory.
According to DataQuick 37.7 percent of April sales and 35.4 percent of March sales were bank resales. That puts the total bank properties sold over those two months at 20,440.
Now compare that to the 37,793 properties that banks added to their inventory based on ForeclosureRadar's exclusive tracking of every foreclosure auction in the state over the same two months..
So much for REOs being gone by June - just in the last two months the banks had a net INCREASE of 17,353 in their CA REO Inventory (roughly $7.3B in bad loans).
Looking at what lies ahead, we expect to see the banks take back another 40,000 to 50,000 properties in California over just the next two months based simply on the increases in notices of defaults over the last 4 months, and the month to date foreclosure sales.
Bottom line - foreclosure inventories are rising and will likely continue to rise in the coming months despite the pickup in home sales.
Comments:
Sean,
I'm trying to predict the end of the foreclosure market in my local area of the Monterey Peninsula. My thought is that once the REOs are all sold, the market might return to a level of normalcy (is there such a thing?). Not every sold or refi-ed property in the last couple of years will be on the bank-owned bandwagon!!
I've been tracking the sold properties from the MLS and can easily count the number of homes sold in a given time frame. I'm wondering if I could factor some kind of ratio for FCs to sold homes and figure out a time frame as to when we can see the end.
Am I making sense??
James Frangella
Sean,
Dataquick numbers do NOT count foreclosure sales unless they are on MLS. The numbers you quoted are likely "distressed" (short sale + MLS REOs). All other REO sales are in addition to the DQ numbers. Bad mistake for a supposed expert. What say you that sales of all kinds are accruing FASTER than REOs?
Anonymous - DataQuick reports on public records data - as such the MLS has no impact whatsoever. To be clear their numbers on REO resales are based on properties that had a trustees deed recorded (97% of these went back to the bank) and were then resold fro the bank to a 3rd party.
You are correct that sales of all other kinds are currenly higher than new REOs (though amazingly that wasn't true in January). But the point here is that the banks are taking back more propertes than they are getting resold. That means bank inventories are rising despite reports that MLS inventories are decreasing.
Sean (from Lance's computer)
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