A very interesting piece on housing’s “shadow inventory” over at the Housing Bubble Blog. The whole piece is well worth a read and the article contains a number of links you can follow for additional information.
Laying A Road Mine That Will Explode Later
On Friday I proposed the following: “There is something going on right now regarding the “shadow inventory” and lender-owned foreclosures. I suggest an initiative to counter this and expose it for what it is; illegal. It should be something like this: To use public pressure and legal avenues to stop the collusion within the real estate industry, lenders and the government to manipulate the housing market to the detriment of consumers.”
“I invite any and all input in this endeavor, especially ideas on what legal actions we might take. A few things are clear; the government has no mandate to set housing prices. The agents and lenders are breaking the law if they are colluding to manipulate inventory. Let’s get to the bottom of this and if we find that this sort of thing is happening, we should do something about it.”
It was related to this article in the desk clearing post: “(In the 1980’s) President of Buffalo Federal Savings and Loan at the time was Bill Perry, and Bjerke said Perry was adamant in his opposition to forcing an immediate sale of all of those homes. At the time they were getting pressure to market them immediately from bank regulators.”
“The company held a meeting with local realtors, put all the properties in a hat and let them ‘draw’ for the rights (listings) to sell those homes as they could without placing prices under the current market values. This was done to avoid driving down property values in Buffalo and to reduce losses to Buffalo Federal Savings and Loan.”
There is plenty of evidence this is going on. San Francisco Chronicle, April 2009: “A vast ’shadow inventory’ of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say. Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. ‘We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,’ said Rick Sharga, vice president of RealtyTrac. ‘California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.’”
Source:
The Housing Bubble Blog
Ben Jones
Laying A Road Mine That Will Explode Later
Hi and welcome to The Profit Motive, I’m your host Caleb Lawrence. Once upon a time in America the media acted as the watchdog of the corporations and the state. In the modern era it’s all about ratings and profits, opinion has been substituted for news and frequently is presented as fact. 
