DataQuick released their April sales report today for CA which showed a 26.8% increase in sales over the previous month. Great news and confirms the reports I've been getting from my Realtor friends that things are picking up. But is the worst really behind us? Some believe so, in this CNBC report respected investment researcher Charles Biderman predicts that all the REO inventory will be gone by June.
Thanks to a new addition to DataQuick's monthly CA Sales Report which tells us the percentage of monthly home sales that are bank resales, we can now quite easily see just how well banks are actually doing on getting rid of inventory. According to DataQuick, 37.7 percent of April sales and 35.4 percent of March sales were bank resales. That puts the total bank properties sold over those two months at 20,440. Now compare that to the 37,793 properties that banks added to their inventory based on ForeclosureRadar's exclusive tracking of every foreclosure auction in the state over the same two months...
So much for REOs being gone by June - just in the last two months the banks had a net INCREASE of 17,353 in their CA REO Inventory (roughly $7.3B in bad loans). Looking at what lies ahead, we expect to see the banks take back another 40,000 to 50,000 properties in California over just the next two months based simply on the increases in notices of defaults over the last 4 months, and the month-to-date foreclosure sales. Bottom line - foreclosure inventories are rising and will likely continue to rise in the coming months despite the pickup in home sales.