'Shadow' condos dim sale outlook

I was just about to post:
http://finance.yahoo.com/tech-ticker/and-now-shadow-inventory-is-coming-back-to-smack-the-condo-market-494478.html?tickers=xhb,dia,spy,hd,len,low
The term "shadow inventory" is used in many different ways. My definition is: housing units that are not currently listed on the market, but will probably be listed soon. This includes:

Unlisted new high rise condos as discussed above. Note: these properties are not included in the new home inventory report.
Homeowners waiting for a better market. Some of the increase in inventory in April might have been sellers hoping to take advantage of the tax credit. This includes the accidental landlords who will try to sell as soon as the market improves and the current tenant's lease expires.
REOs, foreclosures in process and some percentage of seriously delinquent loans (some will cure, some are already listed as short sales). See: Mortgage Delinquencies by Period
It is difficult to put a number on the total, but it is in the millions of units and all this inventory will keep downward pressure on house prices for some time.

Add this to the potential double dip, the toasted Euro, and raising interest rates (future rates) and we just might see some REAL bargins. If I've read this correctly...The RE Goupher has seen his shadow and we're gonna have some more winter coming our way. If we are going to save this town we better get better Chinese Food and see if there are any Chinese(nationals)carpenters looking to buy RE in NYC.
The Yaun might fair well in this town.

http://therealdeal.com/newyork/articles/jonathan-miller-of-miller-samuel-gerald-guterman-and-westwood-capital-join-forces-in-new-condo-conversion-venture-condo-recovery-llc

http://therealdeal.com/newyork/articles/jonathan-miller-of-miller-samuel-says-new-job-converting-distressed-condos-with-venture-condominium-recovery-llc-no-conflict

Mr Miller wants prices to come down for his business venture. He abruptly started focusing on "shadow inventory" right before this venture was announced. I used to trust his comments/opinions now he's just another "vulture".....Come to think of it. I wonder why his Radar Logic partnership failed?

chicken or egg

Does Mr Miller want price to come down for his business venture, or does Mr Miller have a new venture because prices are going down?

Ultimately shadow inventory though immeasurable and no matter the number as this less important if we all conclude it's a lot. And any sane person would have to.
If someone can afford to sit on inventory and piece meal it out, shadow isn't much of a factor at all.

The real questions are:
1)Will those holding shadow inventory be able to continue to sit for 6 months,12 months, 18 months out.

2)How many of them were able to hold on because of;
a)non heavy pressure from banks to wait for a market return (past year) in everyone's best interest in case there was a rebound? Follow up question, if yes will it/can it endure another 12 months?
b) If(or when) interst rates go up, when? by how much? and how much will effect?

3)As we enter year 2, will the pressure to those who were forced to alleviate some of that inventory by renting sales units build as yearly statements show lower net rental income affecting building appraisals, tricking down to lines of credit,interest payments, etc.
The rental income effect is slow with 1 year/2 year leases taking the same amount of time to manifest in yearly statements, both for the holders of property and the banks.

this is national, but you have to wonder whether or not there are a fair number of condos in NYC bought during the height of the market that might have owners in similar situations. our market started to decline quite a bit later than the others, and when it did the banks already had a backlog of foreclosure loss and activity. i doubt banks would be eager to accelerate the process here, possibly hoping that the market would improve prior to needing to do so. in any event, interesting.

http://blogs.reuters.com/rolfe-winkler/2010/05/21/walking-away-without-er-walking-away/

"James Hagerty quotes interesting data from LPS Applied Analytics that shows banks struggling to handle the backlog of mortgage delinquencies are allowing non-paying borrowers to stay in their homes longer.

One in six are living rent-free for at least two years. One in two are doing so for more than a year, but less than two."

truthskr...Does Mr Miller want price to come down for his business venture, or does Mr Miller have a new venture because prices are going down?

Either way it's a TOTAL CONFLICT with his market commentating business. He has to give up one or the other. Hopefully the media will wake up before his Q2 comments.

"Does Mr Miller want price to come down for his business venture, or does Mr Miller have a new venture because prices are going down?"

Yes, Mr. Miller, like SteveF, think that they, not the global financial crisis and the popping of the bubble, are what is driving RE prices.

;-)

Sorry but I see it more like....a newscaster is outside a bodega doing a story on how this location has been cranking out an obscene amount of lottery winners, and then he/she goes in the store and buys some tickets for him/herself. ;)

steveF, kind of like GS making its investment calls? come on, be a sophisticated investor.

how many buyers of real estate seriously parse through JM's reports? and to the extent that they do, those years when his numbers were being used by elliman to pump up the market more than compensate for his downward bias now.

swe....Prices are trending higher and any distressed selling(early 2009) is over. Miller started this venture thinking that this was the next depression. He was wrong. So what does he do? He pulls out the old "shadow inventory" talk. Put the old scare into the banks to get them to sell to us at big discounts....it's so obvious.

Hey Jimbo,
You debated me on Curb why not here? Defend yourself to us. Prove me wrong bro about your conflict. I know your here.......

> swe....Prices are trending higher and any distressed selling(early 2009) is over

Because you said so?

We all know how that worked the last 20 times you said it, most of them right before major drops were announced.

lol.

AR, buyers/sellers have little to cling to. They soak up any market information b/c so little is available. IMO, they def use Miller's comments/opinions for market direction.

swe..shhh go way.

steveF, i have talked to so many people who have bought over the last five years my head aches. not a single one had done any macro or micro research. they just felt "it is a good time for us." i take that back, recently one couple told us we as well as others had convinced them to wait. but they still hadn't done any independent research. anyone who had seen JM's work had only seen it through the sanitized version of elliman.

amazes me that price corrections ever occur. the reason they do is that the income/credit isn't there to support the prices. although they are still doing their best to provide the credit.

AR...point well taken.

AR, like to continue but I'm outta here. Have a great night.

buy now or be priced out forever.

> swe..shhh go way.

SteveF, I know you can't handle the true, but shhhsing me won't work.

You should cry and run away again.

"amazes me that price corrections ever occur. the reason they do is that the income/credit isn't there to support the prices. although they are still doing their best to provide the credit. "

Its why things avalanche and stay there for so long.

Manhattan didn't move, didn't move, everything felt good, even as the country crumbled... and then once it hit here, it hit FAST. And these things don't bounce. They linger and sputter.

'87 took 5 years to bottom... and I'm sure there was someone like SteveF saying things were going to jump IMMEDIATELY each month from '86 through '91.

AR: I think one reason they don't do any research is that they wouldn't even know how to do it. Valuation isn't a skill they teach in economics.

A number of very smart people are also innumerate, and this turns out to be a good correlate of default:

http://www.economist.com/business-finance/displaystory.cfm?story_id=16113147

Okay lemmings... the god of cashflow will now see you.

I once posed this question to my Rabbi....

If Yahweh is the one true G-d, why would there be non-Jews?

He answered,"someone has to pay retail".

"Either way it's a TOTAL CONFLICT with his market commentating business. He has to give up one or the other. Hopefully the media will wake up before his Q2 comments."

What do you care, steve? You know what I do when I see what I feel is an underpriced asset and I seem to be the only one that can see it? I buy. If you think things are fairly priced right now, kick back and if they go down, buy. Of course, you gotta have liquidity: never go all-in if you think a market is just fairly priced.