Foreclosure in Golf Community Questioned : But What About The Big Foreclosure Picture?

More confusion and spurious accusations in the real estate business as a bank owned property in Rancho Murieta, CA “shocks,” realtors according to News10:

The 3,800 square foot home on De La Pena Circle in the exclusive neighborhood known as the Fairways was listed for sale in August at up to $200,000 below fair market value, according to brokers and agents familiar with Rancho Murieta real estate.  The home, priced at $460,000, remained on the market for exactly 13 minutes.

“I was shocked.  I think everybody was shocked,” said Peggie Miller of M & M Distinctive Properties.  Miller had tried for two years to help the previous owner sell the property with an initial asking price over $1 million.

Miller described the four-bedroom, three-bathroom custom home as “stunning,” with double glass entry doors, a separate master suite, granite countertops and an outdoor kitchen with a four-tiered fountain nearby. “It was anybody’s dream home,” she said. News 10

The news report then goes on to detail how this one single sale of a bank owned property -  to the son of the asset manager at US bank who repossessed the property – is now responsible for having “had an immediate impact on the value of other homes in the neighborhood.  Broker Ina Semrau spoke to News10 at one of her listings on the golf course around the corner.  A deal for $850,000 collapsed because an appraisal could not support the price.”

Quite honestly – I am amazed at the garbage being reported as news in the real estate markets currently. What exactly is shocking about a foreclosed home selling to a bank insider for less than last years value? The price was $120 per square foot – so less than it was 2 years ago. Shocking? Not in the slightest.

What is shocking is the efforts being undertaken by the banks and the media to disguise and or hide the amount of foreclosure property sitting on their books and the amount of news reports such as this one which seem written solely for the headline. Sure it makes entertaining reading. I actually laughed out loud when one of the “shocked” realtors said, “Thirty-two years in the business and I’ve never seen anything like that.”

Hard figures are carefully concealed and hidden away amongst spurious government-issue press releases and – as far as I can tell – figures pulled from thin air and in every way conflicting. How many empty foreclosure properties are sitting at over valued prices on the bank’s books are there? 10 million? 25 million? Enough to collapse the economy completely? As far as I can tell – the figure is around 24 million.

24 million empty properties sitting on a bank’s balance sheet as an “asset.”? And valued at Mickey Mouse inflated prices? Just how many can the market stand before falling apart?

Jeff Nielson at Seeking Alpha puts the number at 22 million and seems to have a similar opinion of the media as myself.

Bloomberg noted in February that at the end of the 3rd quarter of 2008 U.S. banks were holding $11.5 billion worth of foreclosed properties (in nominal value) – more than double what they held a year earlier. This doubling of the banks’ inventories of foreclosed properties occurred during a year when there were ‘only’ 2.2 million foreclosures,

This year, U.S. banks are on pace to nearly double the total number of foreclosures from 2008 – yet all the reports from U.S. propaganda outlets indicate declining inventories of unsold homes, month after month.

This farce also extends to the new home market – except the fabrications are even more extreme. U.S. home-builders have been building roughly 50% more homes than they are selling, for every month for the last two years. This is why the U.S. propagandists never report “new home sales” and “new home starts” in the same article. Despite this horrendous discrepancy, and a long-term trend which can only end with mass-bankruptcies among home-builders, “inventories” of new homes have been reported as declining every month. Seeking Alpha

We need to start dealing with this – or at least being honest with ourselves as an industry – but the foreclosures continue and one has to wonder where market prices would be if these 22-24 million properties came onto the market. Before you know it – every American would be able to afford their own home. And we wouldn’t want that.