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>>DALE: Good afternoon this is Dale Snyder with The Snyder Group at Keller Williams Realty,
here in Las Vegas, Nevada.
Today's topic of discussion is going to be going over the infamous shadow inventory.
You know the banks are going to flood the market, the prices are going to fall, and
world's going to end, right?
So, I just want to go over that today. Let's jump right in and have some fun.
[music]
So, to start going over the "shadow inventory," what's going to happen, and yadda-yadda. I
think the best place to start is to summarize 2012. And just as a - you know - a preface
here, to make sure we're clear, I only talk about the single-family homes.
We do a lot of condos sales, townhome sales, but just to simplify it I do single-family
because they're submarkets. The condo market's different, the townhome market, and those
other markets are different, the single-family homes.
That's a separate conversation in itself, reach out to me I'd be more than happy to
have an educated conversation with you on that market, specifically.
In 2012, we saw 31,009 single-family homes sales in the Valley. You know I can't get
into details on how many more short sales, foreclosures, by then you're going to be yawning
and turning off your video.
So, in summary about 60%-70% of what's sold last year was distressed. We'll just leave
it at that, alright?
And what's in contract right now, meaning the buyer and seller agreed on a price that's
in escrow and it's set to close in the next couple of years. [laughs] I'm joking. Because
a lot of these are short sales and they take three to eight months to close.
So, we have 3,780 contract, and 3,261 units for sale on the market. This is where it gets
very confusing because people think, "Wow! there's still 14,000 homes for sale in Vegas."
Well, there's not. When you go on to Realtor.com, Zillow, and those other search engines, they're
going to show you what's in contract. Those homes are not for sale anymore. There's only
3,000 for sale - total.
And if we want to talk absorption rate it's hard to do that when the majority of what's
in contract or short sales are just pending bank approval because those would've already
closed.
So, we would have sold more than 31,000 units. If you factor in the short sales and all of
the homes in contract as available inventory we have about 5 to 6 months supply, which
isn't a good pulse on things.
We actually, if you go on what's currently available for sale, we have about 1 month's
supply of inventory. Keep in mind a healthy market is about 6 months of inventory.
So even if all of those in contract were for sale we would be at an equilibrium - "a healthy
market." We are in a very strong seller's market, right now.
Alright, so now let's move on to the pink elephant in the room, right? The Notice of
Defaults, the Foreclosures coming, you know, the world ending. We've got in January, there
were about 800 to 900 Notice of Defaults filed in Las Vegas.
This is a massive increase because the AB-284,which I'm not going to go into details on,if it's
basically just the bottlenecking of the foreclosure process because the banks had to produce the
original notes and yadda-yadda-yadda,and other things before they could foreclose.
Well, they found away around it, they just do an affidavit and they can start the foreclosure
again. Keep in mind, the banks don't want to foreclose. Why do you think they're giving
people $20,000-$30,000 to do a short sale? They do not want to foreclose.
So, the vast majority of these properties are probably going to come on the market as
short sales and we'll see an increase in the inventory. But what we'll mostly see, is an
increase in the homes in contract not an increase in the homes on the market.
We have a huge pent up demand of buyers, it's not just hedge funds buying up these properties.
Let me give you an example, we list about 4-5 homes a week. When we list a home we get
on average for every 10 offers -and we are getting about 10 offers on every home we put
on the market within the first week or two, if it's priced right.
For those 10 offers, we are seeing at least 4 to 6 of these offers on people that are
wanting to buy these homes and occupy them. So if we had 10 times the inventory, we would
sell it. There is a shortage of inventory.
Even if the banks were to "flood the market," [quote unquote] we would absorb that inventory.
Prices went up, in some markets 25%, last year. Worst case scenario, we might see the
market stabilize, maybe it will drop a little bit. But I'm not on the campaign, as some
of the other REO agents and people in town are talking about how the market's going to
slip -you know, you need to sell your stuff now.
I think we're in the recovery period, we might see a little bit of a slippage come this summer
with these Notice of Defaults climbing. But it's a good thing, we need more inventory.
So as far as a "shadow inventory," just to close on that if you will, my professional
opinion on this is, my crystal ball, so to speak is, we are not going to see inventory
flooding the market.
If you own Bank of America or Fannie Mae, would you Foreclose and flood the inventory
when prices are going up? Or would you slowly release that inventory over time, allow the
market to continue to go up and encourage the market as a whole to recover, the economy
as a whole to recover? Exactly.
You're not going to flood the market with inventory, it makes no sense and they don't
have to. These banks are backed, if you will, by us, you know, by the government - so they're
not going to flood the inventory.
So, if you'd like to have an informed conversation about this process and what's going on in
our market or different submarkets of the Valley if you're looking at buying, selling
or investing, please reach out to me.
It's Dale Snyder with The Snyder Group at Keller Williams Realty. If you found this
video of value please make a comment or share it with your friends.
Have an awesome day.