Hey, look! Another REO update!

You come to look at a real estate blog, you're gonna get some REO action now and then. It's been a couple of months since I did an update on what our REO activity looks like, so I figure I'm due for another one.

Not a lot has changed since the last update in terms of percentage of the market. As of today, 27.1% of our active listings are bank owned. That seems to be a pretty stable number, although the inventory is turning over rapidly. Despite accounting for only around a quarter of the active listings, though, REO's account for 44.7% of the listings in our MLS so far this year. What that tells you is that for the most part, they don't stay on the market very long. In fact, the median days on market for a sold REO this year has been 22 days, versus 53 days for non-REO's.

REO listings continue to account for most of our sales. 60.5% of sales this year have been REO's. That number might be trending down a little, as 57.4% of our sales in the past three months have been REO's, and only 53% of our pending sales are REO's. That trend may not hold if we start to see an increase in REO listings, however. I have some thoughts on that further down the page.

A couple of months ago, I posted a chart that outlines what's going on with homes in the foreclosure process. I pulled the data from Foreclosure Radar, and they've since updated the way that they track active auctions. I like the new way better - it looks more in line with the actual numbers that I've been seeing for unresolved trustee sales. So I've fixed my chart now to reflect that. What you'll see here is that over the past several months, there's some fluctuation in the number of notices of defaults and trustee sales, and the number of properties going back to the bank. There's not a strong trend in these numbers, although you could make a case for a slight upward trend over the past year. There's one easily identifiable trend, however. Do you see it? The red line? That's active auctions. What that's telling us is that we've got a growing backlog of unresolved trustee sales. I've written about this a few times. What we've been seeing more of than anything in recent months at the courthouse steps is postponements. Some cancellations, a fairly stable rate of properties going back to the bank, and a metric ****load of postponements. So that red line is going higher and higher. As of today, we have 146 unresolved trustee sales, which is actually down a little bit.

One of the things I've mentioned on a couple of Monday mornings in recent weeks was a growing backlog of unlisted REO inventory - properties that had gone back to the bank, but hadn't yet been put on the market. There's always going to be some backlog of these. In some cases we see properties get listed within a couple of weeks of the foreclosure date, but in some cases it takes months. We had seen that backlog grow to the mid-60's a few weeks ago, but it's back down to about 60 today, which is kind of on the high end of the normal range. We'll probably start to see some more inventory coming out of that over he next few weeks, and in fact, we probably already have seen some increase in listings from it. That's probably a good thing.

At some point, as I've said before, those unresolved trustee sales are going to resolve one way or another. Some of them are going to cancel, but most of them are probably going to go back to the bank and get listed as REO's. It's not going to happen overnight, and there aren't enough of them at this point to reset the market. The thing to watch moving forward is the active sales line on the chart. If it flattens out, or starts to trend down, it might be a sign that the tides will change, and short sales will probably start to take a bigger share of the market until values increase. If it keeps moving north, then we're probably in the REO market for a good while longer.