Bend Economy Bulletin Board

February finished strong the last 7 business days in Central OR, raising sales per business day to 23.8, the highest rate in over a year (last chart). February list to sold ratio is up just a small amount from January and like January significantly below previous years (second chart). Big dips in the list to sold ratios early this week brought the trend down (3rd and fourth charts). Improved sales combined with expired/ terminated/withdrawn, pended, then contingent listings are resulting in slight downward pressure on inventory over the past 3 months with a very slight upward pressure the past 30 days, so slight, with the margin of error considered could be slightly the other direction. (first chart). http://www.centralorproperty.com/Central,ORTrends.html

Buzzwords in the REO grapevine indicate banks are at the beginning stages of putting more REO homes on the market. Just buzzwords and drinking fountain scuttlebutt though and the reality remains we don’t know how much or when the banks will decide to or will be allowed to put more of these properties on the market. We also don’t know the fate of all of the expired, terminated and withdrawn listings which have contributed significantly to the declining trend of inventory. What we do know is the overall inventory trend continues its downward direction, sales activity continues to improve over last year, List to sold ratios are significantly lower than previous years and at the same time, the “shadow inventory” continues to exist, is probably growing but continues to be mysterious. http://www.centralorproperty.com/Central,ORTrends.html

List to sold ratios remain around 1.6 for the year. Significant development this is because years past we were in the middle of significant ramping up this time of year. Improved daily sales activity (last chart) as well as a high percentage of expired, terminated, withdrawn, pended then contingent listings are resulting in slight downward pressure on inventory over the past 3 months with a very slight upward pressure the past 30 days, still so slight, with the margin of error considered could be slightly the other direction. (first chart). http://www.centralorproperty.com/Central,ORTrends.html

List to sold ratios YTD are well below the 2010 average (second and fourth charts). In general, I am finding the buying public somewhat disappointed in the selection of homes – especially acreage properties. Not that there isn’t a lot of inventory still on the market at prices around 2000 to 2002 levels, just not as much as generally believed. Reality usually lags behind perception. When the market turned sour it took about 18 months for reality to set perception to the side.

The buzzwords from the REO “experts” still say we have a huge inventory of bank owned properties sitting on the sidelines but to this day, there is no ramp up in this inventory. Freddie Mac and Fannie Mae have been putting homes on the market at a trickle pace with a smidgen from other banks. Keep in mind, even doubling REO inventory in Bend would only equate to about 120 homes and approx. 16% of the market. In Redmond, about 65 homes and approx. 18% of the market depending on count of other sale types (short sale/“non-distressed”). The highest number of REO in Bend since May of 2009 was 121 representing 10% of the market at the time (Res, Man, Res W/Acrg, Manu W/Acreage,Townhome, Condo). See the chart titled “List Count” at http://www.centralorproperty.com/Central,ORTrends.html

Failed/Terminated short sales and expired/terminated “non-distressed” properties continue to significantly draw down inventory levels. At the same time, slightly improving sales activity is reducing inventory as well albeit at a slower pace.
All in all it’s still a mixed bag out there. Not so great but not as bad as many believe.

There were approximately 700 scheduled auctions at the end of last yr before they started getting delayed, and ultimately canceled. All those had auction dates scheduled within the ensuing 6 months. And that volume doesn't count all the new foreclosures that normally would have been processed since that time but haven't due to the paperwork issues. So I don't think we're talking about a mere potential doubling in REO inventory coming but rather a tidal wave of properties hitting the market. And now it will likely hit in a very compressed time frame as the logjam finally breaks and all the properties are realeased at roughly the same time. I'm hearing this will start in April with new but expedited NOD's. If so, the volume will probably peak late summer and into the Fall, and turn those inventory numbers on their head. Originally I was thinking we would be down another 10 percent or so on home prices this year but now with this wave of supply coming I am thinking more like 15 to 20%. Of course that would put even more people under water and in danger of foreclosing. We won't be out of the woods on this for quite some time.

I'm guessing a "tidal wave of properties" hitting the market and home prices falling 20% would make jlemay very happy .....................

With the Oregon courts finding that MERS doesn't have the authority to foreclose non-judicially I think we will see many of those foreclosures slowly tick through the court system. How long do you think it will take to put 1000 foreclosures through the Deschutes County Court, have the sheriff's sale, and then the 6 month redemption period?

My gut says that a lot of the folks that had their foreclosures canceled won't be finally kicked out of their place for a year, and we won't see these properties come onto the market for a year and a half or more.

I'm guessing a "tidal wave of properties" hitting the market and home prices falling 20% would make jlemay very happy .....................

No, I am just very tired of agents ignoring reality concluding that things are getting so much better based on a very superficial analysis of the data. I am not directing this at rtpage who presents a fairly balanced and reasoned view, though I do think he is currently a bit too optimistic. I don't have a dog in this fight and I think it is tragic that so many people are losing their homes. Nobody (except agents) are helped by inaccurate projections about the market. I had agents telling me 2 yrs ago what fantastic buys were out there and that we would never see those prices again. Thankfully, I did my own analysis. And hopefully those who read this will do theirs as well. But again, not to leave the wrong impression, let me say that rtpage provides a very nice service.

jlemay wrote:

I'm guessing a "tidal wave of properties" hitting the market and home prices falling 20% would make jlemay very happy .....................

No, I am just very tired of agents ignoring reality concluding that things are getting so much better based on a very superficial analysis of the data. I am not directing this at rtpage who presents a fairly balanced and reasoned view, though I do think he is currently a bit too optimistic. I don't have a dog in this fight and I think it is tragic that so many people are losing their homes. Nobody (except agents) are helped by inaccurate projections about the market. I had agents telling me 2 yrs ago what fantastic buys were out there and that we would never see those prices again. Thankfully, I did my own analysis. And hopefully those who read this will do theirs as well. But again, not to leave the wrong impression, let me say that rtpage provides a very nice service.

Well said and I agree. This morning the Feb. nat. median existing home sales price fell 5.2% to NEW LOWS and lowest level since April 2002, sales in the West were down 8%. There is no bottom yet and this summer and Fall the stock market will likely take a big hit and economy could slow big time or have another recession. I'd say another 10-20% down is realistic. Keep in mind that on the way up id went further and lasted longer than almost everyone thought, now the mirror image process is likely underway.

popgoesbend wrote:With the Oregon courts finding that MERS doesn't have the authority to foreclose non-judicially I think we will see many of those foreclosures slowly tick through the court system. How long do you think it will take to put 1000 foreclosures through the Deschutes County Court, have the sheriff's sale, and then the 6 month redemption period?

My gut says that a lot of the folks that had their foreclosures canceled won't be finally kicked out of their place for a year, and we won't see these properties come onto the market for a year and a half or more.

Hey Pop, I am not aware of what "MERS" is and what the court "finding" implies. Thx in advance.

[Moderator's note: In order to use the quote feature don't check the "Disable BBCode" option on your post. I've unchecked it for you so the quote shows up correctly]

Wikipedia has a concise description about the MERS controversy, which is still unresolved.

http://en.wikipedia.org/wiki/MERS

MERS asserts to be the owner (or the owner's nominee) of the security interest indicated by the mortgages transferred by lenders, investors and their loan servicers in the county land records. MERS maintains that its process eliminates the need to file assignments in the county land records which lowers costs for lenders and consumers by reducing county recording fee expenses resulting from real estate transfers and provides a central source of information and tracking for mortgage loans. MERS' role in facilitating mortgage trading was relatively uncontroversial in its early days a decade ago but continued fallout from the subprime mortgage crisis has put MERS at the center of several legal challenges disputing the company's right to initiate foreclosures. Should these challenges succeed, the US banking industry could face a renewed need for capitalization.

I see that some new auctions just got scheduled.... 6 with the trustee for B of A scheduled for Aug 8th. That's probably where we start up again.

5 more showed up today with the same Aug 8th date.

List to sold ratios up very slightly putting slight upward pressure on inventory and so slight that actual inventory levels could go either direction. Ratios are significantly below years past ratios with a significant long-term downward trend. 2011 list to sold average is well below that of 2010 at a time when the ratio is usually the highest of the year.http://www.centralorproperty.com/Central,ORTrends.html

Average Sales per business day in all of Central Oregon for the month of March improved almost one full point over March of last year, a continuation of the improvement witnessed Y.T.D. of this metric.

The majority of new listings are “non-distressed” properties that are typically undercut in list price by short sales and bank owned properties. Short sale new listings come in a distant second offering competitive pricing yet are still problematic transactions; although much improved over past years. Bank owned inventory has dropped significantly and continues to be the hot segment of the market, most listings enjoying very short marketing times and many instances of multiple offers. Bank owned coupled with short sales comprise most closed transactions.

The current situation described above has resulted in limited availability in most cases unless the buyer is willing to pay 10 to 30% or more above bank owned and short sale prices.

Failed/Terminated short sales and expired/terminated “non-distressed” properties continue to significantly draw down inventory levels. At the same time, slightly improving sales activity is reducing inventory as well. There is still continued talk of the bank owned “shadow inventory”, yet the pace of these properties hitting the market remains a trickle.

With emphasis on cautious optimism, our market appears to be improving. The disposition of the Bank owned “shadow inventory” as well as the probably bigger terminated/withdrawn/expired “shadow inventory” will definitely impact market direction in the short term. Improved perceptions from outside Central Oregon continue to bode well for our market, retirees like it here, inventory levels are on a long-term decline and according to Bend BB’s report on the rental market, things are looking up for investors as well.

Are these numbers really that meaningful when we know it's going to hit the fan in 5 or 6 months? More than a dozen foreclosures a day are being processed in Bend. This will continue until we get back to the 700 that we had scheduled before all the cancellations, plus anything new over the 5 months that nothing new was processed. We actually had 25 foreclosures scheduled today alone, just by Bank of America, all with auction dates of Aug 19th. They seem to be picking up the pace. There is no way that demand will be there to balance that kind of supply. Regulators can do anything they want, it will only prolong the inevitable. Some here were talking about banks holding back properties, taking their time to make sure they get fair market value, etc. That is pure fantasy as is readily in evidence with the mass dumping that is now going on with B of A. 25 foreclosures in a single day is a major wake-up call. On a brighter note, I think that once this last wave clears we will finally be able to start a sustainable recovery process. Finally. They say a typical bust, peak to trough, is 7 yrs. That is exactly the way this is playing out. Recovery in 2013.

I sense the opportunity for another bet here. How high will the MLS inventory go this coming fall or winter due to the "mass dumping"? 10% higher? 50% higher?