Where is the inventory?

In Pittsburg, CA where we purchased a house last year, there were 530 foreclosures and there are 15 Real Estate Owned (REO's) on the market. This does not add up - where are the houses?Here are a couple of interesting perspectives:

1. The banks are holding onto them until the market gets stronger, and they can make a larger profit on the sales.

2. The banks don't need the money - they have the bail-out money and don't need to do anything rash.

3. Banks don't want to flood the market causing further price deterioration.

4. The local governments don't want the property taxes to be completely annihilated, and they have already been impacted by the huge reduction in property tax dollars collected.

5. Someone I spoke with in Sth. CA who is an investor says that the banks are hiring people to manage the properties which means that they are in the real estate business! Essentially, they have choices - they got our tax dollars and can now react as rationally as they like to protect their business models even if it means exploring other areas they previously have not.

6. Another insider shared that the wholesale packages being sold are requesting the wholesaler to sell for .80 cents on the dollar or more, and they have to sign a contract to that effect.

It is all very interesting stuff. Foreclosures are on the increase and at some point things will change. Hopefully at that point investors will have a chance to participate fully in this recovery.