The Real Estate Channel has an interesting article: Why Are Banks Withholding Highend Repossessions Over $300,000 From the Market?

Here is what he had to say about OC:

Orange County is situated between Los Angeles and San Diego. With a population of roughly 3 million, it includes such cities as Irvine, Santa Ana, and Anaheim as well as the tony towns of Newport Beach and Laguna Beach.

Like so much of California, the housing collapse after the bubble peak has been severe.

As of July 16, RealtyTrac listed 6,270 repossessed properties. Although 3,200 of them have been taken back by banks within the last six months, 650 have been in the inventory of banks for more than two years without having been placed on the market. As with Cook County and Miami-Dade County, very few foreclosed homes in Orange County are listed for sale – 227.

More than 3,800 of these repossessed homes are priced above $300,000 and 650 for more than $1 million. Yet not a single home over $1 million is currently on the market. Only 85 of the 3800 bank-owned properties priced at more than $300,000 have been listed for sale. This strategy is looking familiar, isn’t it?

There are 5,694 defaulted properties listed by RealtyTrac as of July 16. Although banks accelerated the foreclosing of properties in 2010, they have placed delinquent homes into default at an even faster pace. Half of the 5,694 defaults occurred in the past two months. More than 2,400 defaulted properties are listed at more than $300,000.

Are there a substantial number of non-foreclosed homes for sale at more than $300,000? You bet. Of the 15,599 homes listed for sale on Trulia, 12,249 have asking prices more than $300,000.

The inventory of homes for sale rose steadily in the second quarter of 2010 according to the Orange County Real Estate Blog. Short sales now comprise 20-30% of all sales in most cities in Orange County and this has put downward pressure on home prices. Had the banks placed more of their REOs on the market, prices would have very likely crumbled on the upper end. When banks finally release these repossessed and defaulted homes to the market, which is what will happen.

While I disagree with the author’s methodology in using RealtyCrap for his foreclosure stats (probably some double counts due to multiple loans, and REOs that have sold), Trulia for inventory (it seems greatly overstated compared to Steve Thomas’ numbers), and his overall lack of knowledge on the OC market in using the $300k price point ($500k would be a better number) — I do agree with the basic principle of his article — there is a huge amount of shadow inventory lurking in the market at the higher end.

I don’t think I am the only one who questions this report, as it appears Calculated Risk disagrees with the methodology as well.

There is a report arguing lenders are sitting on a huge amount of REO. I disagree with the methodology in the report (I corresponded with the author). In my view, better (and much lower) estimates come from Barclays and housing economist Tom Lawler.

However, I am not certain that is the article he is referring to, because CR also had this to say:

My goal is to let everyone know what I know – my intention is not to embarrass anyone (so no links to the articles). If I’m receiving these articles (multiple times) others are probably reading them too.

I can only assume that is the article in question, and judging by the content of the article — then I am fairly certain it is the same one.

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