Disquieting Development In Real Estate

[DeadManCrawling]

My wife and I were driving around some of the hardest hit neighborhoods in our area this evening, in terms of foreclosures.

Some of these neighborhoods are in the midst of 60-70% foreclosure rates. Yes, really that high. We are in the Tampa suburbs, in Pasco County, one of the worst hit areas.

What surprised me: By all appearances, the foreclosure crisis ended in the last 2-3 weeks. We saw perhaps 3-5 For Sale signs every 5-6 blocks. And we drove a fair distance around these areas.

A month ago, and in previous months, the signs COVERED these places. You simply could not walk there without falling over a For Sale sign every 50 feet.

Now, we looked closer. The homes are STILL empty. The signs are gone from the yards, but you cannot make a place look occupied when it is not. It was apparent that a shift has occurred in marketing terms.

We still have one of the worst foreclosure rates in the nation. I think it is still around 45% total. Nearly HALF of the homes here are in foreclosure.

So, what I THINK is happening: The psychology behind potential buyer's eyes when they saw so many signs might have been discouraging. So the lenders quit advertising them with signs on the streets. That may seem like a small matter, and maybe it is, but the level of desperation it suggests is not good.

There has been no change in the local market. It occurred to me that maybe investors had bought all these houses, but that's not the case. The houses are still unsold. I checked a bunch on the local MLS, and they are just sitting there. Like the crazy aunt in the attic that everyone can hear and no one wants to admit.

My wife works as a Realtor, and I am going to ask her to inquire. 2 of her colleagues handle about half of BoA's foreclosures in our area. I am curious to see what they have to say. Amusingly, they will probably end up selling our old house. Which is in foreclosure. And also does not have a For Sale sign out front.

The houses are still there. They are still empty. Vast numbers of them. We saw them today. But the industry either ran out of signs all of a sudden, or is afraid the huge numbers of signs were having a negative impact on possible buyers.

Thoughts?

I will let you know if the other Realtors have any info as soon as I find out.

[pileated]

I think you are right. With all those signs up, potential buyers probably thought that with the market the way it was, they would get an absolute steal.

In addition, buyers were probably leery of purchasing a house in a neighborhood full of houses for sale. Something is wrong, and some people might not think it is merely due to foreclosure sales. Or they might be afraid to buy an "as-is" house. Or they might think the neighborhood is doomed, having so many vacancies.

So with the signs down, the foreclosures are no longer quite so obvious unless people start counting vacant houses.

[frogger]

In our area, there are massive amounts of property for sale, many of them foreclosures. Of all of the properties for sale, I think that I've seen (maybe) 2 signs that stated foreclosure.

Most of the local banks try to sell in-house first, so if you see a for sale sign by a local bank, you can bet it's a foreclosure. The big banks are using real estate professionals.

Property for sale everywhere.

Vacant property everywhere.

Crime is running rampant.....

It's not pretty out there in the real world.

[bulletproof77]

It is pretty much the same story here in the hard hit areas of Southern California. In my "old" neighborhood, there are no signs etc. just empty house after empty house. They changed the locks on my old house, padlocked the gates and put up "NO Trespassing" signs, but that's it. The entire formerly upper middle class golf course type neighborhood has changed into a pretty scary place over a year. I think the banks have just dug in their heels and are trying desperately to change course. However, what that "course" is I have no idea. Local Realtor's complain incessantly about having no housing stock to sell, yet anyone with eyes and a brain can see we are over run with empty homes.

[StartingOver08]

... Local Realtor's complain incessantly about having no housing stock to sell, yet anyone with eyes and a brain can see we are over run with empty homes.

We have the same thing here...there is very little SALEABLE inventory. What that means is either owned by an individual that has the capacity to sell it without lender approval (loan is less than market value) or the bank already owns it so we can get an actual answer to the offer. However, over the past couple of months the banks are NOW much more responsive to short sale offers. They are actually responding timely and favorably to reasonable market offers. So the short sale properties are once again a viable route.

However, there is still a huge inventory of homes that are in foreclosure and not on the market because the lender/servicer is dragging their heals in the foreclosure action. These homes were on the market and offers were made and signed by buyer and seller. The bank turned down the offers and now the properties just sit. Or the seller's just walked away.

As to signs, most of our homeowner's assn's that did allow signs have changed the rule to prohibit signs entirely. You can see the listed properties on the MLS and various websites, but the communities have no signs.

[junker]

in my area it was a 2 sided sword that got the banks and investors. before the market crashed...a group of investors bought a mountain top a mile from my former house.....and promised to make it into a resort area like tahoe..of course it didnt materialize...in fact they went bankrupt...but not before causing home prices here to skyrocket in anticipation..the investors were buying up EVERY piece of property available...now with the reality of the resort gone and the real estate market crashing on its own....prices in this little town have plummeted..the foreclosed house i recently bought was just last year going for 3 1/2 times more than i paid...the investor that had it along with 7 other properties went bankrupt also..b of a held the note...and was just happy to unload it at a fraction of what they carried on it....on a 6 block street here i counted 27 vacant houses...a couple had for sale signs the rest just sitting vacant...at the peak of all this a few years ago..when real estate was at its peak and the mountain was going to be a resort...i sold my other house..in one day..before the sign was even up in the yard...to a out of area investor....everyone said i was crazy for selling so quickly..the market is going higher....today that investor is about to go bankrupt...that home is worth 1/3 of what he paid me...and is sitting vacant ....

[FLBK7]

I don't know what to make of the market. A friend found her dream in her neighborhood of choice. It was not advertised and didn't have a "for sale" sign. She found it through her realtor. It was a foreclosure and the asking price was $140K. She bid $140K, the full asking price. The bank (BOA) came back and asked for $150,500!! (Is this even ethical???) To make a long story short, suddenly there were several offers on the property, just like during the RE bubble! My friend ended up getting the property after many offers and counteroffers and endless worry, but for $174K. Was it worth it? Absolutely. Even in this distressed market this is a prime property in a prime neighborhood and on a lake to boot. It was also in excellent condition. It just needed fresh paint, a new refrigerator (it was missing) and landscaping.

Getting back to the point of the thread... it was NEVER advertised and never had a "for sale" sign.

[dakota112]

Most home values across most parts of US will continue to fall in value as we go forward into depression. There is only a faint heart beat of a chance that this dead economy is going to recover. Homes are dead weights and anchors to your life that hold you down and back when you most have to be liquid and mobile when times change. That has been my experience. I guess as I get older I have less use for a home and all the work that goes along with it. Good luck with your new home and enjoy it for many years to come in good health.

[Flamingo]

In our area which was going through a huge increase in development over the past severa years and just came to a standstill with this economy, signs for former new developments that have started advertising again brought down the cost of new McMansions from the high $300,000's to $450,000's to between $225-$250,000. The new homes in that price range make it harder for older homes to sell in the same price range. Our good friends' daughter is in real estate and that is a primary factor in our area for other homes not moving. There are many "for rent" signs out there or just empty larger homes that were new 10 to 20 years ago that need upgrades. Why purchase old and need renovations when you can get the same thing brand new in basically the same area?