Phantom Inventories can be Deceiving (Simi Valley housing report)
We are constantly hearing all the time that Simi Valley housing inventories are shrinking and that sales are picking up. I have talked about it in my market updates. Let me put this in context. What most are not aware of is the Phantom Inventory that has not been put on the open market; meaning that the Banks are carrying a much large amount of inventory and this inventory has intentionally not been submitted to the Multiple Listing Services to be marketed.
As a REO agent for a southern California bank, I have seen the Phantom Inventory in action. Just two weeks ago I was assigned a property in Simi Valley. The typical procedure includes determining if anyone is living in the property and if that is the case, then I am authorized to work to get the occupant(s) out. This particular property I was told that if there as anyone occupying the property to report back and wait before proceeding. Essentially the hold over occupants will be living in property and will continue to live rent free until the bank decides it is time to move forward.
RealtyTrac, an online service that provides pre-foreclosure and post foreclosure property data, claims that they have more homes in their database counts than what is listed on the Multiple Listing service according to a recent CNN article.
Several of the listings I have, sat vacant for several weeks before I was given the okay to start marketing. This lag can create a false picture to those agents that are not monitoring the markets and general public who rely on traditional news sources for their information.
Typically real estate performance reports are generated from data provided by DataQuick, however this service does not show the differences between the MLS databases and RealtyTrac. Nor dose the anyone but broker subscribers have access to the MLS data and reports to make those comparisons.
What this all boils down too as you hear the hype about increased sales; know that there is still a large volume of foreclosed properties that have yet enter the market. There is still a large number of pre-foreclosure properties that are right behind the Phantom Inventory.
This real estate inventory build up is much like the build up of snow at ski resorts. The ski patrol goes out early in the morning and intentionally creates avalanches to ease the pressure of the snow build up so a larger more dangerous avalanche does not occur while skiers are out during the day.
If the government and the banks are not careful and do not start to release some of the build up in inventory, we could get hit by a avalanche of inventory all at once and drive prices down at much larger percentages than what is already projected.
