California Foreclosures for May 2009

ForeclosureRadar came out with their May 2009 Foreclosure report for California. While NOD are down slightly MoM, NTS are rapidly increasing with actual trustee sales showing a steady MoM increase as well. The implied level of future sales indicated by the NTS is quite high and even high than last summers peak. With various loan mod programs, increased political pressure and more incentives for short sales I am not sure we will reach the trustee sale peak again but the data is implying we should.

I thought this was the most interesting statistic from the report:

By the end of May we had a record 111,824 foreclosures scheduled for sale, yet just 15.9 percent were actually sold, versus 49.2 percent of scheduled foreclosures being sold a year earlier. Further, when sales peaked in July 2008 at levels 61 percent higher than those reached in May 2009, there were only 64,598 foreclosures scheduled for sale, 42.2 percent fewer than today.

That is what I consider shadow inventory. I don't see huge numbers of REOs (homes that have already been taken back by the bank) sitting on the sidelines being held off market. But I do see massive numbers of homes able to be taken back but banks repeatedly holding off. It is still an open question whether the banks ultimately take the homes back or not. The banks are slow to ramp up the trustee sales and homeowners in a bind are hoping for a bailout instead of dealing with their reality. IF the dam breaks it should be dramatic but that is a huge IF.

Note: I have added a foreclosure research link to the site, see here.