October 1st, 2010 10:22 AM by Lehel S.
They're there - we just don't see them yet.
That seems to be the consensus of Realtors and others in the industry who say banks are still holding on to a massive supply of foreclosure properties.
The question is, when will they release those properties? And how many homes are we talking?
Some fear banks may unload too many at once, a move that would be good for cash-strapped buyers seeking bargains but bad for overall property values.
"A year ago, banks were processing foreclosures, but for some unknown reason, they are just sitting on them now," said Lynn Briggs,
a Realtor and sales manager with Coldwell Banker Tri-Counties in Diamond Bar.
"There's a whole shadow inventory out there ... and it's definitely there."
RealtyTrac, an online marketplace for foreclosure properties, released a report today
showing that foreclosure homes accounted for 24percent of all U.S. residential sales in the second quarter of 2010.
Moreover, the average sales price of properties that sold while in some stage of foreclosure was more than 26 percent below the average sales price of properties not in foreclosure.
California's numbers were far worse.
Foreclosure sales accounted for 43 percent of all sales in California during the second quarter, the third highest percentage among the states. That equated to 62,492 foreclosure properties that sold for an average of 39.3 percent less than non-foreclosure home sales.
California's second-quarter foreclosure total was up 3.84 percent from the first quarter, but down 32.86 percent from the same period a year earlier, RealtyTrac said.
James J. Saccacio, RealtyTrac's CEO, noted a positive trend.
"While foreclosure sales increased in the second quarter, non-foreclosure sales increased even more, spurred on by the homebuyer tax credit that expired during the quarter," Saccacio said in a statement.
"That had the net effect of lowering foreclosure sales as a percentage of total sales
during the quarter, but that may be a temporary dip as the removal of the tax credit could drive more buyers back to discounted short sales and REOs."
Darrell Done, a Realtor with Coldwell Banker's Lake Avenue office in Pasadena, said lenders would be unwise to release a glut of bank-owned properties onto the market.
"If you were Bank of America and you had homeowners in certain neighborhoods who were paying their mortgages on time while other mortgages were defaulting ... you wouldn't want to release those foreclosure properties," he said. "If you did, that would have an immediate effect on the values of the properties whose owners were making their payments."
Done said lenders would be better served by trying to keep struggling borrowers in their homes longer. That way, they could work with them and and help them resolve their financial problems.
"Notices of default are being reported, but the banking industry doesn't want to be the seller," he sa