Bay Area

[mikebolen]

As any regular to this forum knows we have many threads and comments about shadow inventory. This article is interesting in that it deals with many of the issues we discuss in this forum on a regular basis. According to this article shadow inventory is about to be released and as such prices will continue downward:

http://tinyurl.com/ybrdq7b

[DAJJO]

A complete eye opener. I went to another seminar today, prediction is 6-7 million properties will be release next year alone.

[norcalnative]

My wife saw this in the Journal. I hadn't had a chance to read it yet but seems to make sense it fits the mood we see here on the Forums regarding the poor handling of the foreclosure process and selling to new/potential owners etc.

[Smurf]

Thanks Mike, that's a very good article.  In areas where folks bought higher priced homes using exotic loan products, the shadow inventory will be even higher.  At this point, folks are not even waiting for the loans to recast, they are just stopping payments and waiting for the bank to foreclose.  The wave is coming.

Message Edited by Smurf on 10-02-2009 09:37 AM

[J01]

You could be right.  We've been hearing it for months.  But funny how something always seems to come up when the wave is supposed to hit. 

http://www.foreclosuretruth.com/

[Bargain_Hunter]

Since the first wave hit, the government has been prepared. :-(.

[bayalex]

I'm still waiting....

[TomP]

LOL! actually its not new.. its just on going...

Ever since 1998 when people were using Stock Options (free money) to buy homes at what ever the seller wanted, and later exotic loans (ARMs), just to keep up with the appreciated prices caused by stock options, the eventual correction will be an ongoing one until all the excess buying gets cleared out.

Nothing new, just a very long correction working off a decade and layers of bubbles...

"Especially surprised are real estate brokers and mortgage lenders in Silicon Valley, where, despite the continuing tech bust, the housing market has exploded recently after a year and a half of steep price declines. Prices in the San Francisco Bay area have fallen by 1.3% over the last year. The declines in Silicon Valley have been far sharper. Still, "over the last month, the market has gotten hot again," says Joel Spolin, president of Absolute Mortgage Banking in Palo Alto. "It's almost like it was 18 months ago."

Even the beneficiaries of the hot housing market are questioning its underpinnings. "If you had asked me three weeks ago if it would go crazy like this, I'd have told you you had a hole in your head," says Nancy Mott, a Realtor for Alain Pinel Realtors in Palo Alto, Calif. "My gut feeling is that this may be just another bubble."

Businessweek March 11, 2002.  

http://www.businessweek.com/magazine/content/02_10/b3773052.htm 

[TomP]

$30 billion home loan time bomb set for 2010
Carolyn Said, Chronicle Staff Writer
Sunday, September 20, 2009

   http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/09/20/MNOR19N2B1.DTL&type=business&tsp=1

Thousands of Bay Area homes have a ticking time bomb embedded in their mortgage. The homes were purchased with loans known as option ARMs, short for adjustable rate mortgages.

Next year, many option ARM payments will begin to readjust, slamming borrowers with dramatically higher monthly mortgage bills. Analysts say that could unleash the next big wave of foreclosures - and home-loan data show that the risky loans were heavily used in the Bay Area.

From 2004 to 2008, "one in five people who took out a mortgage loan (for both purchases and refinancing) in the San Francisco metropolitan region (San Francisco, Alameda, Contra Costa, Marin and San Mateo counties) got an option ARM," said Bob Visini, senior director of marketing in San Francisco at First American CoreLogic, a mortgage research firm. "That's more than twice the national average.

"People think option ARMs (will be) a national crisis," he said. "That's not really true. It's just in higher-cost areas like California where you see their prevalence."
Of the 10 metro areas nationwide with the most option ARMs, three are in the Bay Area, according to Fitch Ratings, a New York research firm. They are the East Bay counties of Alameda and Contra Costa, the South Bay area of Santa Clara and San Benito counties, and the counties of San Francisco, Marin and San Mateo.

Together, these areas account for the second-most option ARMs in the country, although they are still far behind the greater Los Angeles area (including Los Angeles, Riverside, San Bernardino and Orange counties), according to Fitch data.