Live Lake Forest

For the month of April 2009, the sales volume in Lake Forest was up again compared to the same period last year.  There were a total of 63 closed sales in the MLS, a 12.5% improvement to the 56 in April 2008.  The prices were substantially lower though. 

The 29 sales of single family homes ranged from the low of $305,000 to a high of $702,500 and averaged $432,160 at $235/square foot, a decline of more than 21%. 

The low SFR closing for the month was $305,000 for a 3 bedroom, 2 bath, 1,250 square foot bank owned home.  It was only on the market one day, and sold for $1,000 over list price.  

The prior MLS sale of this house was in the summer of 2005, for a price of $624,900.  It was on the market 17 days that time, but sold for the full asking price.  From the title company records, it appears that the house was sold again in August of 2006, for $730,000!  The loans recorded at that time indicate there was a 10% down payment, and 2 loans that came to $657,000 in financing.  Since that sale occured off the MLS, I can’t determine how close to asking price, or how long it was on the market that time.

Condo sales in April ranged from $100,000 up to $324,900 with a median price of $180,000 and an average of $189,605 ($187/square foot).  The 34 sales were made up of 2 traditional sales, 4 post-foreclosure flips, and the other 28 were either short sales or bank-owned.

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

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November 2008 sales in Lake Forest are up 233% from last year’s dismal numbers, but sale price per square foot is off by almost 26%.  Prices ranged from a low of $110,000 up to $724,900.

First time buyers were the driving force behind the improved sales volume, since they didn’t have to unload a previous property in order to buy.  FHA loans with 3.5% down payment were the favorite financing method used in the majority of these sales.  Condos accounted for 61% of the sales.

The “average” condo sold for $231,587, after 59 days on the market with the range running from $110,000 up to $385,000.  Of the 38 condos sold, 12 went for more than the list price.  Most of those were bank-owned and were aggressively  priced well below average @ $185/sqft versus the overall average of $206/sqft. 

Single family homes ranged from a low of $335,000 up to $724,900, and averaged $268/sqft after 61 days on the market.   Of the 7 homes that sold for over list price, 5 of them were bank-owned and sold quickly for an average of $272/sqft and spent only 28 days on the market!

There are currently 218 properties in the “active” status on the MLS, split exactly down the middle with 109 condos starting at $114,000 and 109 single family homes ranging from $335,000 up to $1.650 million.   With single family pricing starting at $335,000, it’s very difficult to get any attention for the townhomes above the $390,000 mark, no matter how large or nice they are! 

The good news at this time is that gas prices are affordable again, interest rates are approaching historic lows, and pricing is getting much closer to “fundamentals” where the cost of owning is only slightly higher than the cost of renting a similar property.  I expect after the first of the year, and particularly after the new administration takes office, that volume will pick up substantially in the lower end of the price range and a lot of renters will become buyers!

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Lake Forest prices now start at $95,000 for a one-bedroom bank-owned condo. It previously sold in 2005 for $260,000 using 100% financing (probably using a “liar loan” without any income documentation!) I seriously question the wisdom of anyone paying that much for a property this size, as you could have rented it for less than $1000/month at that time, instead of taking on a mortgage, taxes, and HOA dues which probably came to a total of close to $2000/month.  This unit has been on the market now for 9 days so far, and I expect it will take a little while longer to find a buyer who wants it and can also afford it using today’s more traditional standards to qualifying for a loan.

The total number of bank-owned homes in Lake Forest today is 45, and they have an average price of $326,000 at $232/square foot.   

Total active homes on the MLS in Lake Forest is currently 287, with only 97 of them available as traditional “non-distressed” sales with a seller who can answer an offer without having to wait for a bank to approve the price.  Of those, there are 30 condos and 67 single family homes.  Prices of the single family homes begin at $459,000 and go up to $1,695,000.  

For buyers who are hoping to pick up a “deal” on a foreclosure property, it is critical to be fully pre-approved in advance and to be educated about the values.  Many of the foreclosure listings are coming on the market priced very low compared to other properties.  They may be in almost any condition, ranging from totally dirty and damaged to pretty nice “move-in” condition.  Alert agents and buyers are finding them and making offers almost immediately.  I have had several experiences where my buyer submitted an offer the first day on the market, then, after waiting for 3 or more days, the bank’s agent asked all the buyers to re-write their offers at their “highest and best” price.  This strategy has created an “auction-fever” environment that leads to the home selling for substantially more than the original list price.  If you plan to make an offer on one of these undervalued properties, you need to carefully review the comps, and make your best offer based on your perception of what it will really cost you to make the home comfortable for you!

Bank owned condo in Lake Forest listed at $95,000

The condo pictured above just came on the MLS this morning with a list price of $95,000.  It is a bank-owned foreclosure, with one bedroom, approximately 685 square feet and described as “needs work.”   For an owner-occupant, with a 3% down payment and an FHA loan, the payments on this could be under $1000 per month, including the mortgage, taxes and current HOA dues of $260/month.  This is priced $20,000 less than the next cheapest unit in the city, which is also bank-owned in the same development.   This may be another example of a lender pricing agressively to generate quick activity and multiple offers, so it may end up selling for more than the asking price. 

This condo was previously purchased in August 2005 for $260,000 using 100% financing.  According to the records in the tax database (not totally up-to-date, but all I have to go on), there are 392 units total in this condo association, and at this time 32 of them are in some stage of foreclosure.  There are also 17 foreclosed units that have sold this year, 4 that are in escrow, and 14 others available today on the MLS.   

Potential buyers need to know that when the level of foreclosure activity is this high in an association, there is a very real probability of HOA dues increasing to the maximum allowable (20%) limit, and possibly additional “special assessments” to make up for all the dues that went un-paid while the property was in the foreclosure process. 

Once a lender forecloses on a property, they become responsible for paying the HOA dues and fees until it is re-sold, but the many months of dues payments that the prior owner didn’t pay, were wiped out in the foreclosure sale, and the HOA simply lost that revenue.  The budget of a condo HOA usually includes all the maintenance and taxes for the common areas, trash service, as well as funding the reserves to replace roofs, resurface the streets, the insurance and maintenance of all the buildings.  These costs aren’t expected to decline, and most aren’t optional that could be eliminated.   

Before buying a unit in an HOA where there has been a lot of foreclosure activity, take a good look at the HOA budget along with the latest financial statements so that you know what you are taking on!

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