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66 I N D U S T R Y I N S I G H T / J O H N G U T M A N GETTING CREATIVE IN A LOWER INVENTORY ENVIRONMENT: FOUR WAYS TO ADJUST Completed foreclosures are at a 32.6 percent year-over-year decline, and the song we can hear professionals associated with distressed assets crying nationwide is the power ballad "Without You." Without inventory, without a direct line to the banks, without a surplus of listings, many brokers find themselves looking for new means of living both in and out of real estate. Well, turn down the Mariah Carey and give it just a bit more time, because although inventory is low, the dance isn't over and the strong can survive. e unprecedented number of foreclosures incurred by homeowners during its peak from 2008 through 2010 revealed new opportunities for investors, and the journey was truly thrilling for many of us as we started working almost exclusively in the distressed market. With conditions so rife with opportunity, Wall Street took notice and institutional investors began swallowing up hundreds of thousands of distressed homes. In 2013, when single-family rental income became securitized for the first time in history, we knew the investor demand was strong and the institutional players were here to stay. e REO-to-rental industry grew exponentially and became the ride everyone was jumping on, often without having to spend anytime waiting in line for inventory. e ability to adapt to the distressed environment brought the first stretch of track on the roller coaster that brought unimaginable peaks. Today, we find ourselves not in a terrifying descent, but rather in a horizontal stretch of track where it is neither exhilarating nor frightening. We're simply passing time until the next loop. And why? In a word – "inventory." According to CoreLogic, in August of this year, 11 percent of total home sales were distressed sales, which is the lowest level since December of 2007. e National Association of Realtors reported total housing inventory fell 1.3 percent at the end of September 2014 to a meager 2.3 million existing homes available for sale. ese conditions make it difficult for investors, brokers, and other industry players to carve out a business in either sector. So, with fewer foreclosed homes coming to market, how can REO providers find adequate supply? Following are a few basic methods that can help you gain access to available distressed inventory, in both good times and in bad: » BUILD A RELATIONSHIP WITH A COMMUNITY BANK Unlike the large retail banks, community banks have a local focus, and therefore, local expertise. Community banks understand the local economy and are actively involved in the local housing market. For agents representing buyers looking in a particular neighborhood, the in-the-trenches intelligence held by community banks is extremely valuable in knowing which distressed properties are–and those that soon will be–available on the market.

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