Two Quick Inventory Notes

First, courtesy of AZCentral’s Catherine Reagor (with a hat tip to Dean Ouellette at the Phoenix Real Estate Guy), it appears the so-called shadow inventory took a bit of a hit last week deep in the, um, shadows …

Several buyers were interested in the Phoenix houses Fannie Mae was selling. Originally, 341 in the region were to be sold to one buyer, according to the federal government.

The sale of the Fannie Mae foreclosure homes became apparent to data guru Tom Ruff of AZBidder on Wednesday night, when he tracked metro Phoenix’s REO inventory — homes taken back by banks that haven’t been resold — and realized it had dropped by 5 percent.

In the latest sales filings, he discovered that a group called SFR 2012-1 US West LLC, located at 135 N. Los Robles Ave., fourth floor, in Pasadena, Calif., purchased 275 foreclosure homes from Fannie Mae that day. Each deal was individually recorded. Fannie Mae’s Dallas office is listed as the seller.

More research shows the buyer is an LLC created by Fannie Mae.

Fannie Mae declined to comment. But a source close to the deal said Fannie Mae is transferring the properties to an LLC that the winning buyer will invest in through a private placement deal.

Bulk sales didn’t make much sense in a scorching hot market like Phoenix back when the concept was first announced, and I’m not alone in thinking it would have served the market much more to have the homes come up for sale normally, through the MLS. From the comments, Marty Boardman said …

If a back room, sweetheart deal with a privately owned hedge fund was cut then Fannie should be held accountable. Tom Ruff sent me the list of houses. It looks like the buyer paid between 65-80% of retail value for several of the properties in Gilbert and Chandler. However, the buyer overpaid by more than $60,000 for that property you refer to in Peoria. My take is these properties should have been made available to the general investing public for purchase.

Further comments indicate the same LLC “purchased” homes in Las Vegas last week as well.

Speaking of Marty, he knows a bit about flipping homes for profit – you can find him at FlippingPhoenixHouses.com – and he has his own theory for the rise in inventory:

 That means 38% of all active single-family homes not in foreclosure, a short sale, or bank-owned have been on the market 69 days or more. In a red-hot real estate market how can that be? I’ve got one word that will explain it – PRICE. It’s likely that many of these houses are overpriced. If the owners of these properties would drop their list prices no doubt they would sell very quickly. There is no problem price can’t fix.

Absolutely true, in as much as there is no problem price can’t fix. The question I have (for which I admittedly don’t have an answer) is if that 38% level of homes that have been on market longer than the current median of 69 days on market, is significantly different than whatever normal might be. In other words, there always are overpriced homes on the market, even in a dead market like we saw in 2007. And earlier this year, many homes in the sub-$100k range that would appear to have been overpriced had sold anyway.

Are there usually only 20 percent of the homes that could be considered overpriced at any given time? I don’t know, but that would make the 38% a more strong explanation for the current rise in inventory.

Personally, I also think there may be some buyer fatigue at play – after trying and failing multiple times to purchase a home, many buyers end up extending their leases and hunkering down for a “better” market, whatever that may be.

Photo credit: zeeweez via Flickr Creative Commons

About Jonathan

Jonathan Dalton is a 30-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at allphoenixrealestate.com.