real estate:

How many homes do banks really own?

Monday, June 1, 2009 | 2 a.m.

Bloomberg News FILE

Bank-owned homes sit in the Silverado neighborhood of Las Vegas in 2008. Although foreclosure homes have been dominating the market, banks have been holding back an unknown number of repossessed properties to keep prices from falling further.

Real Estate in Crisis

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Analyst predicts new-home recovery in 2012 (5-25-2009)
Underwater mortgages mount (5-22-2009)
Price of existing homes drops to '98 levels (5-22-2009)

Housing analysts and Realtors have long speculated about how many foreclosures are lurking in the Las Vegas market.

Foreclosures have dominated the housing market with more than 60 percent of the sales each month being bank-owned properties. That continues to drive down prices.

With sales at their highest level since June 2006 and first-time homebuyers and investors gobbling up inventory, it has raised the question of whether lenders will flood the market with a backlog of foreclosures.

Some analysts have suggested that banks may have as many as 25,000 homes in foreclosure inventory that they have been holding back to prevent prices from dropping too far.

Dennis Smith, president of Home Builders Research, says the inventory of existing homes continues to be a hot topic. He says that if you supplement the Multiple Listing Service data with daily anecdotal information that comes from Realtors, it appears the inventory of existing homes has reached the point where major banks will soon start releasing some of their foreclosure properties that they have been holding back.

That could mean thousands of homes that banks will want to clear from their books, Smith says.

“Realtors who specialize in foreclosures and bank-owned properties are certainly gearing up for a flood of listings during the upcoming weeks,” Smith says.

Based on a recent calculation by a Realtor friend of Smith, there are about 11,100 single-family homes for sale without an existing offer, he says. That translates into about a three to four months of inventory, Smith says.

There were 5,276 bank-owned single-family homes listed for sale in the valley and of those 2,623 had contingent offers, Smith says. That leaves an inventory of 2,653. About half of those homes don’t have offers.

“This substantiates what we have been hearing for weeks,” Smith says. “There are very few (bank-owned) single-family homes that are currently available without offers to buy. If this is what the banks are waiting for, it has arrived. It is not going to change the downward pricing trend of the resale segment for some time yet. However, it is the first real positive sign that there is definitely a light at the end of our tunnel.”

How many homes will be released because of this limited supply is yet to be determined, Smith says. The question is whether there will be enough demand to absorb that inventory.

“Some of the Realtors I respect believe there are plenty of investors and demand from out-of-town people,” Smith says. “However, I believe it is too early to make that call, and they are basing their opinion on hope. Until we know how many properties are going to be released in the marketplace, it is impossible to forecast how long it will take to absorb them.”

Although there are a lot of investors who are active in Las Vegas to take advantage of the low prices, Smith points out that UNLV reports 30,000 vacant homes.

Many investors have been able to get a 12 percent return from rentals, Smith says. But because the sales to investors have increased the rental supply, that return has dropped to about 10 percent.

“If the return on their investment continues to soften, we will see many of the investors stop buying homes,” Smith says. “Although it would hurt the short-term numbers, it might be for the good of the long-term status of the housing market.”

In other news:

Gary Ackerman, chairman of the Gaudin Automotive Group, purchased a single-family home on Skybird Court for $5.4 million. The home measures 7,785 square feet. The seller was Massengale Holdings.

Brian Wargo covers real estate and development for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at 259-4011 or at wargo@lasvegassun.com.

Discussion: 10 comments so far…

By LasVegas2009

5/29/09 at 10:28 a.m.

Suggest removal

My guess is about 65,000 still waiting to be listed and another 30,000-40,000 still in foreclosure process.
By odeman

5/29/09 at 10:07 p.m.

Suggest removal

So what happens when those speculators, I mean investors, decide to dump their houses on the market. It is naive to believe that just because somebody bought them the problem is solved.
By perry161492

5/30/09 at 12:50 p.m.

Suggest removal

i think bank have hell alot houses but like always they will manipulate prices just like realtor and appraiser. they still have alot houses on the book they haven't put out for sale because that will bring down housing prices. were i live i look on website house were sold under 90.000 dollars area border craig losee donna and tropical
By perry161492

5/30/09 at 12:52 p.m.

Suggest removal

there will be more walk away and bankruptcy
By pukiee

5/30/09 at 6 p.m.

Suggest removal

Gibbons - Perry thanks you for the cut in education ... his kids will be a smart as him.
By Linda_in_Vegas

5/31/09 at 9:25 a.m.

Suggest removal

The banks that have foreclosed on homes, are now selling them to other banks.. So I would say A LOT!
By Nick

6/1/09 at 8:41 a.m.

Suggest removal

Bring them on. I am ready to buy another. My brother in law from S America is buying a cash deal this month too. Opportunity is NOW.
By RobertaK

6/2/09 at 9:05 a.m.

Suggest removal

How many of these foreclosed homes were lived in by families that the banks wouldn't work with to modify loans? It's almost impossible to get a loan modification. Rather than work with families to get close to the full price of the loan, they'd rather kick families out and sell a 250K loan for 100K to another bank.
By uddeboda

6/2/09 at 9:14 a.m.

Suggest removal

PUKIEE,

Yous meens Perries kids wil bee as smart has im
By bodieb

6/2/09 at 10:30 p.m.

Suggest removal

Where is the proof that banks are holding foreclosures? From a banking perspective that wouldn't be smart, since their ability to conduct business hinges upon not having a high ratio of bad debt. I'd be interested to see where this speculative info. is really coming from.