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Toll Brothers Inc. Message Board

  • sage2123 sage2123 Oct 3, 2013 1:13 PM Flag

    Thats One Way To Manage Inventory

    Oops.

    Over a year ago, in addition to the money-laundering aspect (confirmed previously) and the REO-To-Rent scramble by PE firms and hedge funds (which is now over as PE become active sellers of apartment rental properties), we highlighted the third implicit subsidy to the housing non-recovery: Foreclosure stuffing. We explained this scheme by banks to limit the amount of available for sale inventory as follows: "since the properties not entering the foreclosure pipeline are effectively kept out of inventory, even shadow inventory, and thus the distressed end market, the monthly drop in foreclosures has acted as a form of subsidy to the housing market, as month after month less inventory than otherwise should, enters the market.... What this has resulted in is a logical increase in prices of the properties that are on the market." Today, the mainstream has finally caught on, and courtesy of RealtyTrac has come up with its own name for this subsidy: Vampire REOs.

    In a press release overnight, the foreclosure tracking service RealtyTrac, observed that a stunning 47% of bank-owned homes are still occupied by their previous owners who were foreclosed on, creating "vampire REOs."

    Sentiment: Sell

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    • yep....that's what I've been saying.....they don't HAVE to foreclose on every house that goes into default, in fact, they don' t HAVE to foreclose on any of them

      contrary to what some of our heros here may think not all houses are worth over $800,000

      in many cities, it's not uncommon to find former "lunchbucket" neighborhoods where houses were selling for 100-150k back in the day, but today with the drop in values aren't worth forclosing on

      (I understand these guys don't want to undstand the math behind it, becaseu afterall, math represents facts)

 
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