Though the amount of notices of defaults seems to be slowing, the “extend and pretend” mentality of property owners and the banks is in full effect. The gap between properties that are in trouble or owned by the banks compared to what is available on the market is enormous.
If you combine homes with a notice of default filed and bank owned properties you get 861. Of those 861, only 51 are on the market! Furthermore, if you want to throw in properties that are waiting to be auctioned (most of these are delayed over a 6 month period), the number of properties jumps to 1,431 with only 78 on the market!
The gap in quite a few zip codes is about 25 properties for every 1 on the market with Westchester, Mar Vista, Culver City and Santa Monica leading the way.
Not all of these properties will come on the market due to loan modifications and people working to becoming current on their payments but it is safe to say that at least 60% of these properties will eventually change hands.
Unfortunately for buyers who are dealing with low inventory levels on the Westside, the current environment does not incentivize the banks to put these properties on the market. The banks are deliberately slowing the foreclosure process down to keep inventory levels low and prices stable.
The banks are not being penalized on Wall Street for non-performing loans and are better off keeping property A on the books at its $800,000 loan level than selling it for $650,000 and having to report the loss.
Since the foreclosure process is being dealt with in a slow and deliberate manner, expect foreclosures and short sales to be above normal levels through 2013.
My office is continually tracking all of this information and is well versed on the short-sale and foreclosure process. Please feel free to contact us for any advice or consultation. As you know from reading this blog, the market has been strong lately due to government incentives and low interest rates making this not a bad time to put your home on the market if you are in a tough scenario.
*The information below was pulled from Realty Trac, one of the leaders in providing real time foreclosure data.
*Please note that these numbers are only based on notices of defaults filed and properties taken back by the bank (bank owned) since November 1st, 2009. These numbers DO NOT include properties where the bank became the owner or notices of defaults were filed prior to November 1st. E-mail us if you would like data that dates further back or specific information on potential investment opportunities.
*The data is a compilation of Single Family Homes (SFR), Condo/Townhouses and multi-family properties. Commercial properties are NOT included.