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Expired Home Listings Adding To The Shadow Inventory

11-27-09

A friend of mine asked me the other day “what’s the real deal in Southwood?” I responded “The real deal?”

He said he heard all kinds of rumors about what is going on in Southwood, that taxes are up and values are down.

I told him that I would do a thorough analysis of the real estate market in Southwood, as I knew it would make great material for the Tallahassee Real Estate Blog.

So today we’ll take an analytical tour of the supply and demand of homes in the Southwood neighborhood.

This post is packed full of information, including four (4) color graphs as well as two (2) important lists of homes. Make sure that you click the continuation link below, where it says "[click to see market graphs and list of homes in Southwood]"

There is a list of the homes that are currently on the market in Southwood, and there is a list of homes that are known to exist in the Southwood Shadow Inventory.

I believe my friend’s question stemmed from an article in the Tallahassee Democrat on November 24th, where it was reported that Southwood was “getting low on inventory” and only 45 homes were on the market. Since I keep a regular eye on Southwood, I found that report to be amazing. And it was. In fact, it wasn’t correct.

The good news is the number of homes for sale in Southwood (67 homes) represents about 9 months of supply, which is lower than last reported. Since the Tallahassee housing market is currently registering 13.7 months of supply (see Tallahassee Housing Report for November), Southwood can claim to be doing well better than average.

Supply and Demand Of Homes In Southwood

Unfortunately, a market at equilibrium usually registers at 6 months of supply, so I see continued pricing pressure for homeowners who wish to sell a home in Southwood. The following real estate graph shows homes for sale in Southwood and compares them to homes that failed to sell as well as homes that sold over the past 8 years.

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[click to see market graphs and list of homes in Southwood]

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Signs Show Shadow Inventory Of Homes Is Growing

11-26-09

Joe Manausa - Tallahassee Real Estate

Yesterday, I received a great comment by a Destin, FL REALTOR® who pointed out that the shadow inventory of homes has many more components than just the defaulted mortgage pool. His example was of homes in a new neighborhood, developed in 2005, where all of the home owners are now upside-down on their mortgages.

As he explained in his comment on the Tallahassee real estate blog, Jim noted

Until that whole neighborhood turns over, it is going to have downward pricing pressure. We are talking about hundred of homes within a small radius.

So what this means, in a nutshell, is many homeowners in these types of neighborhoods become part of the growing shadow inventory because even though they might want to move, they are not in a position to sell their home.

Another Example Of The Shadow Inventory In Real Estate

I was doing some research on the Southwood neighborhood (after reading a poorly researched article) and found that there are 69 homes for sale in Southwood, just in the Tallahassee Board of REALTORS® Multiple Listing System. That doesn’t include any un-listed builder homes or “For Sale By Owners.”

As I was going through the data, I decided to look at all the homes that had been sold in the past as well, and I came across one that was on the market since December of 2005. It recently sold this year by a different real estate company for 28% less than its original list price! The reason that it caught my attention is because it showed a “time on the market” of just 1 day! How could this be …?

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[click here to discover the 2nd largest source of homes in the Shadow Inventory]

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Forecast Calls For Home Prices Dropping in 2010

11-25-09

Joe Manausa - Tallahassee Real Estate

The Tallahassee area logged 163 single-family existing-home sales in October, down 5 percent over a year ago which is not as good as many other areas in Florida that seem to show gains in every market measured. Of course, those measurements are from REALTOR® MLS reports, which typically do not show much more than 1/2 t o 2/3rds of the entire market activity.

The median price for those local sales gained 1.2 percent to $174,000 from $172,000 in October 2008. Fort Walton Beach was the only other market in October to see prices rise, up 1 percent from a year ago.

Graph Of Home Prices In Tallahassee, Florida

The real estate graph above shows that the average price continues to drop, while the median price has actually been recovering. Unfortunately, the graph does not depict appreciation or depreciation, as it shows what home buyers are paying without regard to what they are buying.

Tallahassee Housing Market Sees Slight Increase In Home Sales

This is wonderful to report, as we have been producing reports showing the number of homes selling in Tallahassee declining for over 3 years running! Based upon the growth in pending home sales, it appears like the market is starting to turn around.

Much of this could be due to the First Time Homebuyer Tax Credit which was scheduled to terminate at the end of November, but with the extension, buyers have until June 30, 2010, to close on their purchase, and the rules no longer limit the credit to first-time buyers. Hopefully this will continue the rise in pending home sales.

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[click here to see why home values will drop in 2010]

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Foreclosures Affecting Shadow Inventory Means Trouble

11-24-09

Joe Manausa - Tallahassee Real Estate

We have been keeping an eye on home foreclosures in Tallahassee for several years now and have warned that a log-jam of homes has been accumulating in the shadow inventory. In today’s foreclosure update, we’ll look at the location trend of homes that are being added to the “distressed properties” list in the Tallahassee real estate market.

The foreclosure process begins with a lis pendens filing, so we make sure that we track not only the final foreclosure sale, but also the monthly lis pendens filings in Tallahassee. When we construct a real estate graph of these two important concerns, we find the following picture of foreclosures in Tallahassee.

In the graph above, we see that every month there are hundreds of lis pendens filed in Tallahassee, yet the number of foreclosures rarely reaches a level equivalent to a 20% foreclosure rate. As we have discussed in the past, this might mean that up to 80% of the lis pendens filed in Tallahassee in the past two years have yet to be foreclosed upon.

While there will be some people who are able to work themselves out of the situation through a loan modification, early information suggests that less than 5% of distressed property owners in Tallahassee work out a loan modification.

Others will attempt a short-sale, but without lender support, many homes for sale in Tallahassee attempting short sales are just sitting there waiting for a response from the lender. This is how the shadow inventory of homes in Tallahassee continues to grow each and every month.

Foreclosures By Zip Code In Tallahassee

One report we like to take a look at from time to time is the graph of lis pendens, sorted by the property zip code and month that they were recorded. When we look at this report, we find that some areas are getting hit harder than others. Four zip codes, 32301, 32311, 32312, and 32317 have seen 60% growth or more in lis pendens filed this year versus last year.

Homes For Sale In Tallahassee

By monitoring the condition of homes for sale in Tallahassee, we have noticed that a trend of increased short sale and foreclosure offerings is occurring. The real estate graph below shows that roughly 20% (minimum) of properties fall in the “distressed” categories.

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List Of Recent Lis Pendens Filed In Tallahassee

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FHFA Says Keep Loan Limits Same

11-23-09

Joe Manausa - Tallahassee Real Estate

The Federal Housing Finance Agency (FHFA) last week announced that the maximum conforming loan limits for mortgages originated in 2010 will remain unchanged from the list provided in 2009.

The maximum loan limits for Tallahassee and all other areas in the United States can by found in a download-able format in the right sidebar of the Tallahassee Real Estate Blog, or by clicking this link to the list of FNMA loan limits by county.

So why does it matter what the FHFA says about loan limits? Because the Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $6.3 trillion in funding for the U.S. mortgage markets and financial institutions.

The ability of our market to recover and get people buying homes again is going to rely heavily on the availability of home loans. These Government Sponsored Entities (GSEs) make loans possible for more than 85% of the homes in the Tallahassee real estate market.

The loan limits in Tallahassee are similar to those in most of the rest of the United States, and the following table shows how much money can be borrowed for different types of residential properties in Tallahassee:

Property Type	Loan Amount
One-Unit Properties	$417,000
Two-Unit Properties	$533,850
Three-Unit Properties	$645,300
Four-Unit Properties	$801,950

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Photos from Joe Manausa - Tallahassee Real Estate

Joe Manausa - Tallahassee Real Estate