Have you ever wondered what is really going on in the world of bank-owned property?
Well, even the “experts” aren’t sure. What we do know is that there are a lot of properties going back to the bank from the foreclosure process and not a lot coming up for sale. Last week alone there were 372 properties in Santa Clara County that went back to various banks.
Where are the REO properties hiding? There certainly weren’t 372 new listings for sale.
This is partly because of a lag time in getting the home ready for market before the property is listed on the MLS. More realistically, the banks are simply sitting on them, waiting and waiting for the market to get better or for the government to tell them what they want done with the property or simply because they don’t have systems in place to dispose of them. This is causing a huge build-up of property called “shadow inventory.”
Right now prices are up and inventories are down on all the MLS systems in the Bay Area, but what happens when the banks begin to dispose of their properties in the 4th quarter of the year? If they follow a “drip system,” a little at a time, the values will continue to hold and demand will remain strong. If they move too quickly or with too many properties, the values will decline further—this is the major concern of servicers and agents. There have been many rumors and speculation but until we enter the 4th quarter, it’s wait and see. Look for a lot more property to be on the market and continued low interest rates for buyers.
Good time to buy, you bet!