Mr Mortgage – April Home Sales Rise! But Not as Fast as Inventories.

Posted on May 22nd, 2008 in Mr Mortgage's Personal Opinions/Research

DataQuick just released its April Home Sales report. ‘More homes sold’, which on the surface looks great. But in reality, banks took back TWICE the number of homes they sold, which adds to inventory and extends the housing crisis, contrary to what the monthly sales report would suggest. On Friday we get the national NAR Existing Home Sales report and it may look similar, so now you will know what to look out for. 

DataQuick reported that a total of 31,150 new and resale houses and condos were sold statewide last month, up 26.8 percent from March and down 10.9% from April last year. Last month’s total made for the slowest April since 1995. The question here is, ‘are we chewing through inventory’ and the answer is, NO.

Of the sales, 37.7% (11,750) were foreclosure resale’s. Most of this 11,750 is from the bank REO stock, which is the ‘shadow inventory’I always talk about. These homes are typically sold through real estate agents or large auction aggregators such as the Real Estate Disposition Corp (REDC). Bank REO sales are counted in the existing home sales figures released each month that gets the stock market so hot and bothered. Only a very small percentage of bank REO has been sold each month until very recently when the numbers increased dramatically.

These homes are being sold at massive discounts to the note amount and pose the real threat to home prices across the nation. All over the country, neighborhoods are being marked-to-market overnight due to REO stock being dumped that was never shown as part of the listed housing stock in the first place. At 37.7% of all sales, this inventory is quickly becoming ‘the market’ and is rarely accounted for in the ‘month’s supply’ numbers released each month by the NRA because it is not listed in the MLS in most cases. I talk about it in my April Foreclosure Report released last week.

Last month according to Foreclosure Radar, 22,324 homes were taken back by banks in CA. If there were 11,750 REO homes sold, this means that the ‘month’s supply’ figure is actually growing each month despite sales figures improving. If you back out the 11,750 from the total of 31,150 and just look at ‘organic sales’, there were more homes taken back than sold. It is a real problem when the headline sales number is growing and according to the MLS the supply is shrinking, but in reality the true inventory numbers are actually ballooning due to the bank REO growing faster.

VERY IMPORTANT – Keep in mind that the 22,324 homes that the lenders took back in April were from Notices-of-Default from approx Dec, when there were 33k. In Jan, Feb, March and April there were 38,600, 37,300, 42,700 and 44,100 NOD’s respectively and in the past few months we have seen an increase to about 70% make it from NOD all the way to REO. This means that over the next few months banks will take back up to 31k homes per month, so sales better really pick up or the bank REO inventory will just get worse.

In a nutshell, there were 11,750 foreclosure resale’s, versus 22,324 that banks took back at auction using data provided by Foreclosure Radar. That is approximately $4.4 BILLION added to REO. In addition, the 22,324 were from Dec’s 33k NOD’s meaning we still have 162,700 NOD’s from Jan to Apr that will result in 113,400 bank REO additions over the next four months or $47 BILLION worth. With only 31,150 total homes sold this month, sales better grow quickly to absorb all the foreclosure inventory already in the channel

If sales do grow and the number of foreclosure sales continue to grow as a percentage of total sales, where does this leave Joe and Jane Homeowner and the Builders? If sales do not grow and foreclosure sales continue to grow as a percentage of total sales, we have the makings of a absolute meltdown on our hands. -Best Mr Mortgage

The above is from Mr Mortgage, based upon personal research.

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20 Responses to “Mr Mortgage – April Home Sales Rise! But Not as Fast as Inventories.”

  1. […] Read the rest of this great post here […]

  2. Glad to hear about the inventory. I thought there was more to this story than just sales being up

  3. A lot of downgrading this morning on the 23rd, on Lehman Brothers, Morgan Stanley and Merrill Lynch. So these dumb jerks bankers are expecting higher prices and keeping away some stock ? Keep on California dreaming !

    Oil futures contracts 2016 today 142,09$. Oil is now at 136$. Airlines are crashing. United Airline is kaput 6 months from now. Huge capacity cuts. Everything is soooooo funny and disgusting.

    A couple of days ago the DOW transports was making new highs. Manipulators from Goldman Sachs ? By the way ResCap, not officially in bankruptcy, is being deprived of cash by Cerberus. No more money. GMAC is kaput. GM too. Are they keeping car inventories away too ? 🙂

  4. On Friday we get the national NRA Existing Home Sales report …

    Defending the 2nd amendment not keeping them busy enough, so they branched-out into real estate?

  5. […] Increased Sales but Increased Foreclosures Too Dataquick reported an increase in sales of homes in SoCal the other day that appears promising. But a closer look at the numbers reveals that foreclosures are on the rise and adding to inventory levels at a pace that far exceeds the rate of home sales. Mr. Mortgage explains that the REO’s hitting the market now and in the future could threaten home values more than most people realize. Check it out here. […]

  6. As usual an excellent analysis of todays market. Somehow the media and CAR and NAR like to say the bottom is pretty much over. Well, in fact the game seems to have only just begun. Keep up the good work Mr Mortgage
    We need people like you to get the truth out.

  7. I have the same opinion.

  8. […] Mr Mortgage – April Home Sales Rise! But Not as Fast as Inventories.Last month according to Foreclosure Radar, 22324 homes were taken back by banks in CA. If there were 11750 REO homes sold, this means that the ‘month’s supply’ figure is actually growing each month despite sales figures improving. …Mr. Mortgage's Guide to the TRUTH! – http://mrmortgage.ml-implode.com/|||foreclosure radarPresident robert mugabe foreclosure radar, return were just excite corner sucralfate dogs, pay phone call sea, port steak marinade recipie, clothe foreclosure radar, the benefit billions sudden win kid worship song lyric that bill and …_ – http://journals.aol.com/immygarfield/_/|||Foreclosure Radar – Santa Clarita Valley Foreclosures and Beyond …We have another resource for you when it comes to foreclosures and those properties. Foreclosure Radar will get you what you need. Just input the data in the fields below. REMAX of Santa Clarita and REMAX of Valencia couple with …RE/MAX of Santa Clarita Real Estate and… – http://blog.paris911.com|||Housing bust evaluation; true numbersThe new April CA foreclosure stats are just out, compliments of Foreclosure Radar. They are now the first company with real foreclosure data on the street each month. In April, Foreclosure records were set across the board in California …lucy_chronicles – http://lucy-chronicles.livejournal.com/|||Foreclosure RadarIn response to the increase in foreclosures and short sales, Sean O’Toole founded a company called Foreclosure Radar. Foreclosure Radar allows home buyers to track every foreclosure in California, accurately and easily. …GeekEstate Blog – http://www.geekestateblog.com|||Foreclosure RadarTo this balloon a cage, containing two guinea-pigs and a Justice of the first foreclosure radar had been home – even a Caracalla; for foreclosure radar, whatever were their sins, built baths, and yet most terrible, cases of the wrecked …LATEST – http://trista-gnukb647.blogspot.com/|||Foreclosure Radar with REMAX of Santa Clarita and Paris911We have been working in the new realm with the foreclosure and short sale market – Now we have another resource for you that seems to provide great information concerning the status of the current distressed market. …Paris911 – The 911 Team – http://activerain.com/blogs/paris911|||Foreclosure Radar of REMAX of Santa Clarita by Paris911Here is the Foreclosure Radar block. Try it and give me your feedback. For more precise addresses you are going to have to e-mail with that the system gave you so I can find them in one of the local Boards of Realtors®. …Santa Clarita Real Estate – http://howdoupt.blogspot.com/|||Don’t forget the Foreclosures… by The Paris911 TeamIt would be against the rules for the creator of Foreclosure Radar to publish addresses without being a Realtor – But I can get you the information due to The Paris911 Teams Role, as Licensed Realtors. Furthermore, we have access to …CONNOR with HONOR – http://connorwithhonor.featuredblog.com redline movie countrywide email white lotus kung fu necklacing set it off Tags: Caracalla, Foreclosure California, Foreclosure Data, Foreclosure Homes, Guinea Pigs, Inventories, Ml Implode Com, Mr Mortgage, O Toole, President Robert Mugabe, Radar Return, Remax Of Santa Clarita, Robert Mugabe, Santa Clarita Real Estate, Santa Clarita Valley, Sea Port, Song Lyric, Steak Marinade, True Numbers, Worship Song hot bolg article […]

  9. […] to look out for.? DataQuick reported that a total of 31,150 new and resale houses and condos were http://mrmortgage.ml-implode.com/2008/05/22/94/Home sales up median at 661,000 Santa Cruz SentinelAfter seven months of abnormally few home sales […]

  10. […] Mr Mortgage – April Home Sales Rise! But Not as Fast as Inventories.Last month according to Foreclosure Radar, 22324 homes were taken back by banks in CA. If there were 11750 REO homes sold, this means that the ‘month’s supply’ figure is actually growing each month despite sales figures improving. …Mr. Mortgage's Guide to the TRUTH! – http://mrmortgage.ml-implode.com/ […]

  11. […] across the board in California …lucy_chronicles – http://lucy-chronicles.livejournal.com/|||Mr Mortgage – April Home Sales Rise! But Not as Fast as Inventories.2008年5月21日 投稿者: admin Last month according to Foreclosure Radar, 22324 homes were taken […]

  12. […] Mr Mortgage – April Home Sales Rise! But Not as Fast as Inventories.21 May 2008 by admin Last month according to Foreclosure Radar, 22324 homes were taken back by banks in CA. If there were 11750 REO homes sold, this means that the ‘month’s supply’ figure is actually growing each month despite sales figures improving. …Mr. Mortgage's Guide to the TRUTH! – http://mrmortgage.ml-implode.com/ […]

  13. […] sends the homeowner a first notice of default. … http://lansner.freedomblogging.com Mr Mortgage – April Home Sales Rise! But Not as Fast as Inventories. May 21, 2008 Last month according to Foreclosure Radar, 22324 homes were taken back by banks in […]

  14. […] Mr Mortgage – April Home Sales Rise! But Not as Fast as Inventories. […]

  15. […] April CA Home Sales Rise, But Not As Fast As Inventories […]

  16. […] Breaking April CA Foreclosure Stats […]

  17. […] April Home Sales Rise, BUT Not as Fast as Inventories […]

  18. […] April CA Home Sales Rise, But Not As Fast As Inventories […]

  19. […] April CA Home Sales Rise, But Not As Fast As Inventories […]

  20. […] April CA Home Sales Rise, But Not As Fast As Inventories […]

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