9 replies to this topic

[mikie007]

One of my favorite people I read daily is Jim Sinclair at his http://www.jsmineset.com I love his great inquiring mind with a global perspective and I feel he asks the right questions. Today Jim asked "who knows if sales of "existing houses" includes foreclosure sales?" which might be very revealing. I spent some time and made a couple of calls but found no answer. I thought I would ask this diverse FF Group the question in hope that some one might know the answer or where to look.

REGARDS,

mikie

THE JSMINESET.COM ARTICLE THAT THE QUESTION CAME FROM

Jim Sinclair’s Commentary

Is there a statistician out there who knows if sales of "existing houses" includes foreclosure sales?

U.S. Economy: Sales of Existing Homes Rise Most in Three Years
By Shobhana Chandra

March 23 (Bloomberg) -- Sales of previously owned homes in the U.S. unexpectedly surged last month by the most since March 2004, a sign that the housing market is probably past the worst of its yearlong slump.

Purchases increased 3.9 percent in February to an annual rate of 6.69 million, the National Association of Realtors said today in Washington. Sales were down 3.6 percent from the prior 12 months, the smallest decline in a year.

Gains in home construction, mortgage rates near a 14-month low and an increase in loan applications from a year ago are helping lay the groundwork for an industry rebound. Stocks advanced as traders took the figures as an endorsement of the Federal Reserve's forecast that the economy will grow at a moderate pace.

``We expect the drag on the economy from housing will be gone by mid-year,'' said Dean Maki, chief U.S. economist at Barclays Capital in New York. The rebound in sales is ``an important development.''

http://www.bloomberg...6...&refer=home

Edited by mikie007, 23 March 2007 - 05:34 PM.

[pdx5]

The house is owned by the bank in the first place. Upon default of mortgage payments, the bank simply kicks out the mortgage holder and takes possession. Therefore I don't think it is a "sale" since ownership never changes. But that does not mean the realtors ar enot adding the foreclosures to sales figures to make it look like they are selling more homes!

Edited by pdx5, 23 March 2007 - 06:23 PM.

[mikie007]

OK, understand and no way to separate them. So, looking at the poor retail sales and countrywide bad weather that kept people out of the stores but buying houses, we set a record of sorts in housing sales. And, they had to highlight the wonderful sale increase to bull up the markets and public in general. FNM and FRE should make really good shorts for July or Sept - or even sooner.... and the puts are inexpensive . THANKS! mikie

[Net]

The house is owned by the bank in the first place. Upon default of mortgage
payments, the bank simply kicks out the mortgage holder and takes possession.
Therefore I don't think it is a "sale" since ownership never changes.

But that does not mean the realtors ar enot adding the foreclosures to sales
figures to make it look like they are selling more homes!

Hi Pdx5

I'm not an expert by any means, but what you are asserting doesn't sound right to me. I think the county recorder will show the mortgager as the home owner, for which there is a debt against the property, owed to the mortgagee. Foreclosure changes ownership from the mortgager to another buyer (via auction or some other means), stripping the owner of propery ownership rights due to the default of the debt, for which the property was held collateral. The house is "sold" to satisfy the debt and a new owner is registered with the county recorder.

[Data]

NAR reports homes sold throughs its listing service. Foreclosures are bought directly from the bank and at sheriff's auctions. Those homes are then rehabbed and eventually listed through the MLS for resale. I don't see anything wrong with today's reporting. If the foreclosure sales were counted in the report, they would really depress the median sales price.

[pdx5]

Hi Net.. I pretty much can go along with what your saying. However my impression is that Bank will foreclose first and then try to sell it. So, if it takes a year to sell the house, who owns the house during that period? The Original owner or the Bank? The county may have the original owner on record but who is paying the real-estate taxes during that period before the house sells? For example I received the ownership documents from the county recorder AFTER the mortgage was completely paid off. So it is kinda confusing situation.

[Mr Dev]

Hmm sounds to SIMPLE for me.... as a New Home is sold to a Buyer / Borrower

(and for the first time put on the tax rolls ),

and then after foreclosure again SOLD a second time, by the BANK/ Lean Holder, and thus

it has become a SALE of an existing home and NOT a NEW Home.

[flyers&divers]

NAR reports homes sold throughs its listing service.
Foreclosures are bought directly from the bank and at sheriff's auctions.

Banks are not equipped for managing or selling Real Estate and a good portion of foreclosures are liquidated through realtors.

Also, in case of borrower bankruptcy they do not take title to the property so that the foreclosed person is still on the county records as owner. This way sanitary fines and fines for building violations, tenant issues (no heat. etc) are all lodged against the last person owned the house and not the bank.

At first the banks are cocky and try to get market value for the house, later would sell just to cover the loan and at some point the banking department gets on their case and they have to bring their good/bad loan ratio in line. At that point - we are not there yet - banks will literally give away property, including downpayment, to anyone whose signature is still good.

GC

[OEXCHAOS]

F&D, Exactly, so. We watch the low end since we have an interest in urban rehabbing, and a ton of properties have been "bank owned". They are still rather patient. There was a time when even a little slow down brought about a ton of "scheduled items" on the books of banks and S&L's. Now, with all the collateralization and the demise of the S&L industry I don't know how it works and what the trigger point will be. I mean, who holds most of these low quality mortgages and who will be getting all these properties that they'll have to find new owners for? Mark

[flyers&divers]

Early in the game the banks ROI (real estate owned) department lets their best customers take a shot at choice pieces but soon these people are saturated and anyone with good credit is considerd. F&D