Is it just me or are we seeing a decline in the number of Bank Owned (REO) properties available for sale in Reno and maybe the US?  Is the decline a seasonal issue as we move into winter or is something going on behind the scenes?

In April of this year the Financial Accounting and Standards Board (FASB) changed the method in which financial institutions (banks) could value their toxic assets.  Up until April, 2009, the banks had to value their toxic assets using a rule called mark to market.  This meant that if a property that was on their books for a $200K mortgage and is now selling for $100K then the bank had to show a value of $100K for this asset on it's books.  Makes sense right? 

With the change in the Mark to Market Rule (FASB 157), the banks can now future value their toxic assets which allows for a higher book value and can provide the opportunity for a more orderly sale of these toxic assets.  Instead of having to dump these assets onto a declining market, they can now elect to hold the asset at a higher book value (not impacting their balance sheet, capital requirements, and bonuses) and then determine when it makes sense for them to sell the assets over time.  Could this be contributing to a decline in REO properties available for sale?  How all of this will play out in regard to Real Estate is anyone's guess. 

Comments and questions are always welcome at www.RealEsateByGraham.com

Thanks