Irvine-based John Burns Real Estate Consulting Inc. made national news this past week with a study showing that a new wave of foreclosures will hit the U.S. housing market in the next few years.
According to the Wall Street Journal, Burns Consulting’s study forecast that despite loan modification efforts, the nation has a “shadow inventory” of 5 million units that will be added to the housing market as their delinquent owners lose their homes. This shadow inventory is equal to about 10 months supply of homes.
Wayne Yamano, Burns Consulting vice president, co-wrote the study. We asked him to explain their findings.
Us: What did your study into shadow inventory entail and what were your key findings? How did you define “shadow inventory” for the purposes of this study?
Wayne: In our study, we set out to figure how large the shadow inventory problem is nationally, and to quantify shadow inventory MSA by MSA. We define shadow inventory as the supply of homes that will be lost by currently delinquent homeowners and is not yet available for sale.
Us: Your study says that five million of the 7.7 million delinquent homes will go through foreclosure or a “foreclosure-related procedure.” How is this likely to occur?
Wayne: Most shadow inventory will get out onto the market as an REO or short sale. In any event, it results in the homeowner losing their home, and that home being added to the supply of homes available for sale.
Us: Do the remaining 2.7 million borrowers get their loan payments caught up?
Wayne: Of the 7.7 million delinquent homeowners, we actually think that only about 1.6 million will be able avoid losing their homes, and that the remaining 6.1 million will lose their homes. We say that there is 5 million units of shadow inventory because we estimate that about 1.1 million delinquent homeowners already have their homes listed for sale, and we would not classify those homes as “shadow.
I heard this same thing two years ago, so is it REALLY that bad? Around my area here in the western side of Iowa(near MN,SD and NE border) a foreclosure is hardly ever heard of. Malls are still PACKED, eateries PACKED every nite of the week, people jetting off to Vegas and Cancun and taking cruises like no tomorrow. It must be really bad on both coasts and the deep south? Hell, I don't know. I try telling my wife and family to prepare for tougher times ahead and they look at me like I am an alien, they really do. I think our area since tied to the agriculture sector big time may have missed out on some pain initially, but I know better. So you can see why folks around here are thinking "what recession/depression"
ReplyDeleteAny one else know what I am trying to say?
Its nice to hear people like that, stuck in space with the common sheeple. At least we'll have this guy in the FEMA camp and the head of the line..
ReplyDeleteKnock off the name calling.
ReplyDeleteD-9 your mortag!
ReplyDeleteanon 9:55. the economy is in bad shape more then you think. if i could describe the us economy its like a rich boy who has a nice house cars, money in the bank. his net worth is 500,000 dollars but his finances are a mess. his debt is 4,000,000. he has no way of paying off. our economy is still in trouble. remember the govt has done nothing to fix the underlying problems that caused this crisis (derivatives). All the govt did was extend and pretend but only children pretend not adults. They have put an illusion that things are getting better. The banks are still in deep shit. alt-a option arms,muni bonds,credit cards,commercial loans,are all going bad. also people do not want to think the economy is heading towards to the shitter. just continue prepare for the long term. people may laugh at you and call you crazy but soon they will be the ones that will knocking at your door begging for food. there are tough times coming just continue to prepare.
ReplyDeleteWell I see alot of pain. I live in Canada and everything is smelling roses...so far. But my family (Aunt's, Uncle's and Cousin's) live in the State of Washington and lot's of layoff's and doom and gloom. I did notice alot of people in the casino's. It seems to be worse in California and Nevada and Arizona....
ReplyDelete11:55 has it right on, Things are bad, I'm a real estate broker, but actually I never acted as one, I invested in real estate the past 7 years and I saw it coming, even told the kids in 2003-2006, let mom work hard, this is unpresidented, then I bought, sold and didn't get hurt too much, One thing I didnt do is buy a new car and go into debt, I am so upset that so many spend without thinking. Anyhow today there are area's just an hour outside of Los Angeles that are going for the mid 50k range, sure lots of multiple bids, but these where once 275k homes. it's amazing, So I say this much, we have a big banking problem coming, we have a ton of shadow inventory. Unemployment is bad, I see it first hand with tenants and the kids, there are no jobs, We are running out of unemployment funds and there are no jobs, NEXT violence, people just going crazy for life basics. It's scary times, I'm buying guns and ammo and seeds. I think for the next 2-5 years things can be ugly, This is the NEW WORLD... expect nothing to get better anytime fast. We aren't even near the bottom yet. I drive everyone crazy talking economics, I watch CNBC and Glenn Beck and this site, I listen to people and watch. Things are ugly and I"m a bit scared ,,, scared for my kids, What does a college degree get anyone? there are no jobs,
ReplyDeletePrepare folks, and as Glenn Beck says, when others close to you start to sink unprepared, allow them help. This is not an " I told you so " event. It's beyond imagination for many. Prepare prepare prepare. truely sleep well by having what you NEED, forget expensive things. Do not create new DEBT and pay down the debt you have. Please give 5 or 10, 20 bucks to the owner of this site for his hard work and bringing us VERY INFORMATIVE NEWS.
Cheryl in Califonia
Anon @ 11:58
ReplyDeleteI did notice alot of people in the casino's.
Speaking of Casino's:
Nevada Casinos Lose $6.7 Billion in 2009
Looks like the Nevada Casinos are now subprime, too. LOL
I reside in northeastern rural Nevada. We are fortunate. The economy is supported by the gold mining industry. This area produces millions of ounces of gold per year and provides residents with well paid occupations.
ReplyDeleteHowever, the rest of the state is experiencing a depression. To the west, Reno is collapsing. To the south, Las vegas has collapsed. The state as a whole is completely bankrupt. The population in the entire state is about 2.5 million and now has a budget shortfall of about 2 billion.
There is no relief. There are now two options. Recieve aid from the federal government, which means more printed currency, bringing the risk of hyperinflation closer to reality. The second option is to cut state government to zero and default on debt.
Either option will cause great suffering to residents. It is now assumed 40 states in the union are insolvent. Everyone will suffer regardless of location.
Prepare to help your neighbor. This will not be survived alone. Endure to the end my friends.
I am going to Vegas in a few weeks to help the local economy
ReplyDeleteI can drive down any residential street in my city (So. Calif) and I'll find empty homes, with overgrown grass and sometimes, broken windows.
ReplyDeleteGerald Celente said it best.
When you lose everything and there is nothing left to lose, YOU LOSE IT!
Once you have lost everything and there is no hope left, you become a different person.
I have the "Band of Brothers" DVD series, in it, Private Blythe is fighting two wars, WWII and the war within himself. Lt. Spears tells Blythe that once he realizes he is already dead, only then can he function as a soldier, one who kills without mercy, without compassion, without remorse.
Once we have lost it all, (admitted we are dead, with no hope of recovery) I fear we will all become a Lt. Spears, we will fight for our former lives and freedoms and we will do it without mercy, without compassion, without remorse. Morality will be your biggest enemy.
It is true, morality is often the first casuality in life and death decisions. One cannot fight this war hoping to regain what was once taken for granted. It was a dishonest and immoral system. We cannot and should not return to preoccupation with the absurd and matters of no consquence.
ReplyDeleteIt is time now to focus on the family and honorable allies with others. No man shall stand alone and face what is coming successfully. The government will not assist you because the government no longer has the capacity to assist you.
Help those that are worthy. Gather your loved ones about you and prepare to endure to the end.
7:50am and 9:08am are the kind of worthless cretins that make Henry Kissinger smile.
ReplyDeleteBy the power of Will one can overcome the world.
Nothing has changed since it all first began.
The law is constant.
Do unto others as you would have them do unto you.
Apparently, many fools think their ill fortune is a license to ill. Let them come at me with that crap and watch 'em get shot in the head.
Bang.
:)
Love Always,
Jesus Freak
Feb 21, 12:40 pm is the type of individual that made Charles manson and Benny Hill smile. Dnagerous but completely absurd and irrelevant simultaneously. Quite a feat.
ReplyDeleteBest wishes tough guy.