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The market continues to be strong for the foreclosed homes.  So far this year, there have been 3,254 bank-owned homes sold.  They range in price from a low of $42,000 to a high of $2,450,000 but the average comes to $326,549.  Today, there are only 463 foreclosed homes on the market, and 1,318 in escrow.  The average time to sell these properties has been 43 days.  

The short sales are selling, although not nearly so quickly.  Since January 1, the MLS shows that 1,445 short sales have closed.  There are currently 2,385 in escrow, and 3,015 available as active listings.  The problem with trying to analyze the short sales is that there is no consistency.  Some agents keep properties in the active status, and continue to show them long after they have received offers, while others put them immediately into “backup” status, but really have no idea what the lender will take or when it might close.  This process typically takes so long that by the time the lender gives an answer, either the value has fallen below the buyer’s offer, or the buyer has found another property and withdraws his offer. 

There are 5,964 properties classified as “equity” sellers, but 43% of those, are priced at over a million dollars!  For more modest home buyers, there are currently only 1,211 homes priced under $500,000 and 2,229 priced between $500,000 and $1 Million.  (These numbers don’t add up because some of these are range-priced, so they get counted in 2 categories.) 

I’m now hearing lots of stories of multiple offers for REO properties, as well as on the lower priced non-distressed properties.  I really hope that the real estate decline is coming to an end and that the market will stabilize, but it’s still too early to tell.  The moratorium on foreclosures ended on April 1, 2009 and the number of homes that are starting the foreclosure process has increased.  Since it takes almost 4 months to foreclose, we won’t have a lot of data to report until early August.  

If you are a first time buyer, the combination of the $8,000 tax credit and low interest rates make it very tempting to buy now.  You just need to make sure that the home you buy is one that will meet your needs for several (5 to 7) years because there is no guarantee that once the market “recovers” it will begin to appreciate again!

Search ALL the homes for sale in the Southern California MLS  (there must be at least one that you like!)

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The foreclosed homes in Orange County seem to be selling like “hot cakes.”  So far this year, 2442 homes that were taken back in foreclosure have been sold and recycled back to buyers.  The inventory of Orange County foreclosed homes on the MLS has dropped from 865 a month ago, to 674 today.

There are rumors that this is the “calm before the storm” because the FannieMae and FredieMac mortatoriums expired on 3/31, so more homes are expected to be foreclosed in the next few months.  My data sources of information about homes in the foreclosure process runs about 2 weeks behind reality, so I won’t have much indication of the true impact of this for a little while still.

For the 2442 properties that have closed so far this year, the average sale price is $328,238 ($209/square foot.)  They sold in an average of 43 days on the market at 99% of the final list price.  Many of the lenders, and their REO specialist agents, have stimulated the sales of REOs by listing them significantly below recent comps.  This, generally, has created a lot of buyer interest, and many have sold for over list price after receiving multiple offers.

I just updated all the links to foreclosed homes that are listed in the MLS, so check your favorite areas to see if you can find a bargain!

Search ALL the homes for sale in the Southern California MLS  (there must be at least one that you like!)

Don’t miss the next exciting update to this blog – click on the envelope to be notified by email! 

Thanks for visiting!

The market continues to be busy in the lower end of the price range, and bank-owned and short sales are making up about 61% of all closed sales in Orange County. 

Today, there are a total of 11,577 homes for sale in Orange County.   Of those, 4783 (42%) are labeled as either bank owned or short sales.  Of the 4363 that are currently in escrow, 2925 (68%) are distressed.  In the last 30 days, 1018 (61%), of the 1653 closings were distressed.

Buyers are looking for the best values that they can find, and the best priced homes are usually bank owned.  Short sales are closing more often than in the past, but it is still frustrating for a buyer to make an offer, then have to wait weeks or months to get an answer from the lender.  It will be interesting to see what effect, if any, the President’s new stimulus plan will have.  

The latest foreclosure listings are now posted for selected cities or areas in South Orange County.  If you are looking in an area that I haven’t included, please let me know and I’ll run the list just for you!

Other posts like this:

2008 End of Year Report
2008 Orange County Mid-Year Report
2007 Orange County Sales Report

Search the 11,500+ homes in Orange County

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A year ago today, I posted my predictions for the Orange County real estate market in 2008.  Today, I can look back and see that I got some right, and some wrong.  (Isn’t that how it always is?)

Some things I got right :

The volume increased, (but not as much as I hoped.)  As of today, there have been 24,237 closings in the MLS since 1/1/2008 in Orange County.  It is about 20% above the 2007 volume of 20,000, but I had predicted it to come out between 25,000 and 30,000.  Since there may be some more closings tomorrow, and many of the recently closed sales won’t get reported until the listing agent remembers to update the MLS, it is still possible to hit my “25,000″ mark, but it won’t go much higher than that.  I’ll admit that I was  optimistic.

Prices decreased - even more and faster than I thought they would!  The median price for a single family resale home now stands at $430,000 (off 34.4% from November 2007) and the median for a condo is $260,500 (off 38%).  See the DQ News Chart

There were a lot of foreclosures, and there will be more to come.  The big bailout, and help for homeowners has been a bust.  Very few delinquent borrowers have been able to modify their loans and keep their homes.  The foreclosures have slowed, but that is probably only due to the new California law that lenders have to document that they have worked with the borrowers prior to foreclosing.  There will probably be a big flood of new foreclosures that will hit the market around March.

A lot of real estate agents have left the business.  Final numbers won’t be available until late January, but I know many agents who have found other jobs and will not be renewing their local Association of Realtor®s  memberships.

The Real Estate Industry has become more “transparent.”   Let’s face it – there are too many places for consumers to do their research and credibility means a lot!   If you aren’t honest and open with your advice and opinions, buyers and sellers  will find someone else who will be.  

Nobody is going to buy a house simply because they see an ad that says “Now is a good time to buy or sell!”  DUH!   Actually, I have gritted my teeth recently when I saw a full page newspaper ad that declared “Work with a Realtor® because they know your market!”  The truth is, some do and many don’t!  To become a Realtor®, you need to have a license and pay dues of $115 per year.  You also agree to abide by the Code of Ethics, but there is no required education or additional testing to maintain your membership.  I am a dues paying member of the National Association of Realtors, and I abide by the Code of Ethics and enjoy some benefits like access to research reports, and publications, but membership alone does not give me any knowledge or authority, and I hate that they waste my dues paying for ads like that!  ( End of rant.)

The parts I got wrong: 

The mortgage market has still not settled down completely.  The FHA loans have made a big come-back, after being close-to-obsolete in California for the last few years, but they have also tightened up on their qualifications for many borrowers, and won’t approve a loan for a property that has changed ownership in the last 90 days.  This puts investors in a riskier position if they want to buy a foreclosure, fix it and put it right back on the market.  Loans of over $417,000 are difficult to approve, and the interest rates are substantially higher.  This is causing problems for buyers (with good credit and documented income)  to buy homes in the higher price ranges.

The lenders are pricing their inventory to get rid of it.  I never would have guessed that they would take this agressive approach.  I’ve been seeing REO properties come on the market at 10% below the most recent comps.  This has created a frenzy for buyers who can’t resist what appears to be a real bargain.  Multiple offers have become the norm for many of the REOs, and buyers have been bidding them up to an average of 102% above original list price.  The REOs and short sales, especially at the lower end of the price ranges, have made up 42% of all sales for 2008.

Overall, my predictions weren’t too far off, so I’ll give myself a B+ for getting close.   In the next few days, I will make my new predictions for 2009 and this time I will be more specific and try to get closer to actuals.

Now that half the year is over, it’s time to take a look at how close to (or far from) reality my predictions were that I made in my December post about 2008 real estate activity.  You can go back to read my justifications for each prediction, but this analysis will only address the basic predictions:

The Volume of Sales will increase above the level of 2007.  (Wrong!)

• For the period of Jan 1 through June 30 2007 : 11,532 properties closed
• For the period of Jan 1 through June 30 2008 :  9,732 properties closed

Year-to-date volume is down by almost 16%.  Much of this is the result of the lack of financing due to so many major lenders dropping lending programs, or going out of business. 

Lending standards have also continued to tighten even for solid borrowers.  Appraisals are routinely questioned, or the values discounted (even though the appraiser already discounted from the last comp) and borrowers are burdened with much more documentation that we have seen for a long time. 

Prices will decrease – both listing price and sale price (Correct!)

The average price for homes sold fell from $768,931 to $632,638, a decline of 18%.   (Some price ranges are down by 30% and some are off by only 2%.)  I will review the average price declines by price range in another post in the near future  

The mortgage market will settle down.  (Wrong!)

Fannie Mae & Freddie Mac need to be bailed out, IndyMac just tanked this week, BofA took over Countrywide, many other institutions are hanging on by a thread.  Underwriting standards are tightening, or overtightened in some cases, appraisals are being reduced due to “declining market” conditions even though the appraiser already included that fact in his calculations!  Congress has not yet approved the final FHA reform bill, or extended the increased loan limits that are currently set to expire on 12/31/08.  We have a long way to go before the mortgage market will be stable! 

A lot of real estate agents will leave the business.  (True!)

The actual statistics won’t show until next year when annual dues get collected, but there are a lot of agents getting 2nd jobs, or leaving the business altogether now. 

The real estate industry will continue to become more “transparent.”  (True)

(“Transparent” is a current buzz word!  I interpret it to really mean “open and honest”.)  Consumers are more knowledgeable and demanding the answers to lots of the “hard questions.”   There is more information available every day for buyers and sellers to do their own research of listings, including pricing history, past sales, average values, advice about buying, selling, financing, staging and the merits of different marketing programs.  Delivering notepads, refrigerator magnets and calendars is no longer the way for agents to market themselves to consumers.  They need to prove that they have something of value to provide to their clients, instead of pointing to a “I’m #1 Agent of the WeekTrophy”

Conclusion : Ok, so I already said my crystal ball is cracked.  I am an optomist, or I couldn’t stay in this business.  I believe that there are a lot of very cautious people who would really like to buy a home, but they keep getting mixed signals.  We have come a long way in a short time compared to the market declines of the 1990’s.  There is no doubt that prices got totally out-of-control and unreasonables due to the easy financing of recent years, but once we get back to something resembling fundamental values (for California!), we should begin to see pricing stabilize.  It may take some more time to get there, but I believe that it will happen.

If you have any questions, or need any help with real estate decisions, please call me (or choose a button below!)