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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 bank-owned (REO) homes in South Orange County are still looking like the best values available.  I picked out a list of about 15 that are seriously discounted below their last sale price. 

I am planning to resume posting my “Vic ’s Picks” on a more regular basis – probably once per week.   This week, the list features homes in Coto de Caza, Laguna Beach, Mission Viejo, Newport Beach, Newport Coast, Rancho Santa Margarita, San Clemente and Tustin.  These are all bank-owned and offered for somewhere between $200K and $800K below the last market sale price! 

If you would like to see the actual location on these, click on the little airplane, on the right side of the listing sheet, and it will give you an aerial view of the property.  Some REO agents provide very few photos, so this can help guess what the home may look like.  I’ve also noticed that several of them like to include shots of the bathrooms with the toilet seat up (one is even sideways!)   

If you have any interest in seeing any of these, please give me a call at (949) 457-0281, and we can go check them out together!

You can 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!

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!)