So I get this email from a colleague that likes to tease me about my ongoing argument that we are missing inventory. It states that FHFA is going to start selling REO property to investors. This real estate inventory is mostly rental property. Document here. I was fascinated by the fact that, yes, there are homes in this market for sale that are not in the MLS. Fannie and Freddie are in the landlord business. This program is a Pilot and denotes that it is a small number of potential homes available and if successful, there will be more sales of homes held by the Agencies. You can see the mix here. 90% of the homes are filled with tenants. It will be good to see the REO market come back and present further opportunities to investors in the greater phoenix area.
It was just two weeks ago that I sat down with a company that is approved by Fannie Mae to rehabilitate REO property for them. They had over 1,100 Fannie Mae REO properties in various stages of repair and rehab, which were not in the MLS. I asked them how much of the market share do they have. Their response was “Maybe about 10% of the market.” That would mean that there is over 10,000 properties here in AZ that are going to come to the market soon.
A recent report by Amherst Securities, I could not find the link and will provide once I find it again, analyzed that there is over 20,000 homes in greater phoenix that were purchased by investors at Trustee Sales that are being held as rentals till the market improves. Those homes being held, were not purchased to hold, it was the result of a foreclosure market that has increased in price such that flipping the homes were no longer affordable. The intention of those investors is to put them back on the market as soon as they can.
We may have a shortage of inventory in the MLS, but we don’t have a shortage of real estate opportunity in Arizona. This issue may little solace for homeowners that are significantly underwater in their home, but for those with break even or slight equity positions in their homes, investors that purchased in the last year with the intent to flip but stuck will start seeing a light at the end of the tunnel.
What homeowners who are upside down should take away from this is that NOW is the time to get out of that home and start looking at either purchasing a home now, prior to the short sale or locking in an affordable rental position post short sale so they can reestablish their credit quickly.
“Are you or do you know someone that is upside down in their home? Facing foreclosure? Considering walking away? Arizona has unique foreclosure and deficiency laws you should know. Contact me to understand your legal rights and obligations.”