Focus On REO Activity

It's been a couple of months since I updated you specifically on REO activity. I did a brief presentation on some numbers for our MLS marketing meeting last week, and I thought that I'd cover some of that here for the general public this week.

For today's post, I primarily want to cover what we have coming down the pipeline. But first, a little refresher. Unless you've been living in a cave without any media sources for the past couple of years (lucky you), you'll know that REO's are dominating the real estate markets in most of the country these days. That's certainly true in our area - about 61% of our sales so far this year have been REO properties. So having an idea of what's coming in that arena is one of the big keys to knowing what's in store for us in the coming months.

I made up this chart to illustrate the trends in our REO activity. It's a little confusing and a little busy, but it shows graphically what the various stages of the process have looked like over the past couple of years. The trend lines on all of these indicators has been up somewhat over the 32 months covered in this chart, but most notably, the active auction number (the red line) has been going up pretty dramatically in the past few months. Except for August - I don't know what's going on with that. We haven't seen a decrease in unresolved NTS filings (around 125 today), so I suspect that's just a fluke. We'll probably see that number go back up this month.

As of right now, I can account for about 51 unlisted bank owned properties in the Lompoc Valley. That number has fluctuated a little between 50 and 65 over the past several months, as you may know if you've been following this blog. It's on the low side right now, and because the last couple of months have been relatively slow in the numbers of properties going back to the bank, I'm thinking that we'll see that drop a bit more. As I mentioned above, we're at 125 unresolved NTS filings. This is a high point since I've been tracking it. What's been happening with most of these sales is postponements, usually several times. I don't know if that's because banks are working on avenues with more borrowers to prevent the foreclosure, doing things like loan modifications or short sales, or if it's because they're overwhelmed on a national level and they just can't process things in a timely manner. It's probably a little of both. We have seen more cancelled sales in the past month or two, and a lot of the ones I see are properties that went through the short sale route.

A couple of months ago, I said that I thought that we'd see a bit of an increase in our inventory after we had a couple of active months of REO sales. As it turns out, not so much. We got a small bump for a while in June & July, but we're back down in the 80-90 range again. We did get some additional listings, but our demand is still very strong. Properties, especially houses under $200,000, don't tend to hang around on the market these days.

At some point, most of those unresolved NTS filings are going to turn into REO's. Not all of them will, and they won't all come on at once. I've been saying this for months now - we aren't going to see a "flood" of REO inventory in our market. If you're waiting for that before you decide to jump on a purchase opportunity, you might well miss out on one of the best bargain markets in recent memory. You're waiting for the bottom? I think we're here.