Dr. Housing Bubble 01/18/10

[Crewleader]

The Shadow Inventory of Orange County California. Median Home Price Still Down 33 Percent from Peak for County, Short Sales Make up One-third of MLS Data, Shadow Inventory over Twice MLS Inventory. $2.2 Million Ladera Ranch Property Selling for Half off.

The banking industry has proven that you can legalize financial corruption with enough funding to lobbying groups. The current banking industry keeps pointing to laws on the books, laws they paid lobbyist to write, so they would have a system that generously protects their interest. The first attempt to do something about the corruption comes in the form of a banking tax and the banking industry is none too happy. Ironically, it is the same taxpayer dollars that saved them from financially going into the history books. Yet they are having none of the tax and plan to challenge this measure. On the housing front stories are leaking out that banks are now colluding with crony insiders to create scams with short sales. In brief, a short sale occurs when a home is sold for an amount less than the actual loan balance. This needs to be approved by banks holding the notes.

The scam with short sales is merely one of the thousands of ways the financial industry is siphoning off money from productive sectors in the economy. What is occurring is that in many cases, during the housing boom people took out two (even three or four) mortgages on their home. Since second lien holders have possession of the property as well but in a junior position, they need to agree on the terms to make the short sale occur. Yet in places like California where the housing market has imploded the second lien, (as we will show with an example in Orange County today) are largely just lost bets. In other words the second lien holder will likely get zero but may hold up the sale of the property. However, information is now coming out (surprise, surprise) that the same FIRE employees are working their same magic that led to the bubble:

http://www.doctorhousingbubble.com/shadow-inventory-of-orange-county-california-median-home-price-still-down-33-percent-from-peak-for-county-short-sales-make-up-one-third-of-mls-data-shadow-inventory-over-twice-mls-inventory/

[county worker]

1. Realtors are playing funny tricks to get the prices up.

We've been looking to buy a home for the past few months. There will be a brand new listing and if you call on it that day they say there is already an offer for more than the asking price.

I keep wondering how that can be since there is a large inventory of unsold homes and not a lot of qualified buyers.

What is going on is that the realtor that listed the house makes an offer to buy it at some future time for a price over the asking price. That let's the seller look for another house to buy since they can say they have an offer on the one they are selling. Now if you want to buy the one they are selling you have to pay more than the asking price to top the realtor's offer which will never really be acted on.

I just learned this a few weeks ago.

[Delphinus]

2. Dang, that's slimy!

I hope not *all* realtors are like that.