According to both ForeclosureRadar and DSNews.com, over the last few months, the number of REO homes in California rose by almost 22% from September to October.
Overall California REO inventories show a 21% increase compared to last year’s numbers, but despite this spike, the latest numbers are still well below record levels. In July 2008, the banks repossessed 42% more homes in California. So, July of last year still holds the record for the largest increase in foreclosed homes.
So What Does that Mean for the California Housing Market?
As banks took back nearly a 25% more homes in the October period, REO resales declined, leading to a slight jump in overall REO inventory of almost 6%. But all of this was expected as market demand continues to increase at a rapid rate. The majority of these foreclosed loans in October 2009 originated between January 2005 and December 2007. So it may seem as though we’ve only seen the beginning of the new wave of foreclosures.
Based on ForeclosureRadar’s latest California Foreclosure Report, the number of foreclosures sold at auction to investors continues to grow significantly. Third-party sales jumped 16% from September to October, and compared to October 2008, they are up 381% overall.
Why? Investors are becoming more confident in their ability to resell the properties they purchase at foreclosure auctions. Even though their courthouse discounts decreased from 20% to 17% as well.
Does that Mean More Shadow Inventory?
Even though there is an estimated that there is a still an unreleased inventory of almost 7 million loans, most of these loans have already started to liquidate and contribute to the growing shadow inventory in the real estate market in California. Shadow Inventory numbers increased only due to the slight decline in REO resales. As things begin to stabilize, more banks will release these shadow foreclosures into the market.
Overall, the number of California’s foreclosure filings have remain relatively steady month-over-month. With renewed investor confidence and increased demand for foreclosed homes, all of the pieces are starting to come together.
And this can only mean that we’re starting to recover.
Sincerely,
Mark Shandrow
Real Estate Broker
Shandrow Group
shandrowgroup.com
