US News on shadow inventory

Thursday, March 31st at 8:50am

Shadow Inventory Drops but Supply to Remain High for Extended Period
03/30/2011 BY: CARRIE BAY

The industry’s shadow inventory of repossessed and soon-to-be repossessed homes that aren’t visible as properties for sale has contracted, according to CoreLogic.

Analysis released by the company Wednesday shows that the shadow inventory of residential properties as of January 2011 fell to 1.8 million, down from 2.0 million a year earlier.
CoreLogic estimates current shadow inventory, also known as pending supply, by calculating the number of distressed properties not currently listed on multiple listing services (MLS) that are seriously delinquent (90 days or more), in foreclosure, and real estate owned (REO) by lenders.
While the total volume of properties in the shadows dropped, CoreLogic says the amount of time it would currently take to clear this hidden inventory remains the same as a year ago – nine months’ worth of supply. The company says the unchanged supply calculation is due to the slower pace of home sales the industry has experienced in recent months.
Of the 1.8-million unit current shadow inventory supply, CoreLogic’s study shows that 870,000 units are seriously delinquent; 445,000 are in some stage of foreclosure; and 470,000 are already REO.
For the first time, CoreLogic has examined how loan modifications and short sales could reduce shadow inventory levels. The analysis took into account optimal treatment methods, based on net present value (NPV) calculations, as well as expected severity and re-default rates.
Based on these factors, the company concluded that loan modifications and short sales could potentially reduce shadow supply by one-half. However, low borrower response rates to lender outreach and high modification re-default rates would render even the optimal treatment’s impact to be “small,” according to CoreLogic.
In addition to the current shadow inventory supply, CoreLogic points out that there are nearly 2 million negative equity loans that are currently more than 50 percent “upside down.” The company says these properties will likely become part of the shadow supply in the near future.
Mark Fleming, chief economist for CoreLogic commented, “While the trend of the shadow inventory is improving somewhat, the current level and distressed months’ supply remain very high. The short-term weakness in prices and longer-term weakness in the drivers that affect the housing market imply that excess supply will remain high for an extended period of time.”
The highest levels of distressed months’ supply, which is the ratio of the number of properties that are 90 days or more delinquent to the number of home sales, are in New Jersey, Illinois, and Maryland.
CoreLogic says the driving force behind these states’ elevated supplies of distressed properties is a combination of higher than average 90-plus day delinquencies and low sales activity.
The states with the lowest distressed months’ supply are where the boom/bust did not occur and include North Dakota, Alaska, and Wyoming. The largest state with the lowest level of distressed months’ supply is Texas.

Real Estate in Alberta Courtesy of The Alberta Real Estate Association

Saturday, March 26th at 2:20pm

Sales activity flat in February

Residential sales activity reported through the MLS® Systems of real estate boards in Alberta came in just below year-ago levels in February 2011.

According to statistics provided by real estate boards in Alberta, home sales numbered 3,943 units in February 2011, down just three per cent from the same month last year.

On a seasonally adjusted basis, home sales were even with January, which was the highest level since last April. Nationally, home sales declined six per cent on a year-over-year basis in February.

The provincial average price for homes sold in February was $352,076, up two per cent from a year earlier. The national average price rose nine per cent from year-ago levels to $365,192, although most of that gain resulted from a surge in high end sales in Vancouver.

Monthly residential average prices were up from year-ago levels in Alberta West (+18 per cent), Fort McMurray (+11 per cent), Lethbridge (+8 per cent), and Calgary (+3 per cent). The average price declined in Edmonton (-2 per cent), Medicine Hat (-3 per cent), Central Alberta (-4 per cent), Lloydminster (-8 per cent), Grande Prairie (-9 per cent), North Eastern Alberta (-11 per cent), and South Central Alberta (-12 per cent).

New listings on the MLS® Systems of real estate boards in Alberta numbered 9,335 units in February, unchanged from a year earlier. On a seasonally adjusted basis, new listings have been climbing for three months.

Active residential listings numbered 23,203 units at the end of February, an increase of 10 per cent from February 2010. Seasonally adjusted supply has been trending steadily down since peaking in June 2010.

There were 5.9 months of inventory at the end of February 2011 on a seasonally adjusted basis, edging down from six months in January. Months of inventory have also been trending steadily downward since peaking in June 2010. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.

The value of all home sales in the province totaled $1.4 billion in February 2011, edging down one per cent from February 2010. The dollar volume of all home sales in Canada was up two per cent.

Total sales in Alberta numbered 4,170 units in February, a decrease of five per cent from February 2010. The value of those sales amounted to $1.5 billion, down three per cent from year-ago levels.

The combined value of homes sales activity in Calgary was $768.5 million in February 2011, a three per cent increase from year-ago levels. A total of 1,917 home sales were recorded through the MLS® System of the Calgary Real Estate Board in February, edging up four units from one year earlier.

The total value of home sales in Edmonton was $352.8 million in February 2011, down 14 per cent year-over-year. There were 1,132 home sales recorded through the MLS® System of the Edmonton Association of REALTORS®, a decline of 13 per cent from February 2010.

Important information

The average price information quoted can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods, or account for price differentials between geographical areas.

The Alberta Real Estate Association represents over 10,185 brokers, salespeople and affiliate (e.g. solicitors, appraisers, banks) members throughout the province. AREA serves its members through a wide variety of educational programs, publications and special services. REALTOR® is a trademark, which identifies real estate professionals who are members of The Canadian Real Estate Association and, as such, subscribe to a high standard of professional service and to a strict code of ethics.

A Positive Start to the Spring Market

Sunday, March 13th at 5:29pm


Although we are still experiencing cold weather and snow, the more frequent warmer days are signalling spring is near, and with it our spring market. 

Figures released from the Calgary Real Estate Board (CREB) show that for the second month in a row, single family home sales increased over the previous month figures. In January 2011, the number of single family home sales was 791.  In February 2011, that number increased to 1,169, an increase of approximately 48%.  Condominium sales for February were 468, compared to 302 sales in January.

As I write this on March 11th, our team has done 33 deals so far this month.  This is an impressive increase from the previous month and confirms that we are going to have a very good spring market.

The listing inventory continues to increase, giving buyers a good selection of homes to choose from.  Homes that show well and are priced correctly for the market are often seeing fewer days on market and we have noticed that buyers appreciate that a good, well-priced home may not last long on the market and are writing better offers.  We are also seeing more competing offers.

Does this mean house prices are going to increase?  We anticipate a modest increase this year.  One thing to keep in mind is that any projections of increases or decreases are for the entire city.  In any one district and in any one price-range within that district, there are micro-markets and list and sale prices will fluctuate depending on what the competition is at any one time.  For example, starter homes in a district may have an average sale price of $350,000 for a month, but the average sale price for the next month may be different, depending on supply and demand.  If ten new homes come on the market at the same time, they will have to be more competitive with their pricing and their expectations in a sale price.  If only one or two comparable homes come on the market, buyers have less to choose from and may end up paying a slightly higher price.

In the last month we’ve seen a one percent increase in the average sale price of a single family home in Calgary and we have seen an 18% increase in the number of active listings.

One can’t determine trends from such a short period of time, but all indications lean toward a strong and balanced spring market.

The McKelvie Group Blog

Thursday, March 3rd at 5:06pm

Welcome to our blog. We will begin posting newsworthy items to our blog immediately and welcome your comments

Is a secondary suite right for you?

Wednesday, September 30th at 1:59pm

Calgary – Secondary Suites – Open Houses
Is a secondary suite right for you?

You could be eligible for a $25,000 grant to build or upgrade
a suite in your home.

The City of Calgary is holding three city-wide open houses
for residents…