The foreclosure tsunami appears to be on its way – new defaults, re-defaults, and foreclosure numbers are rising, and there’s still the backlog of those who are attempting to loan mod that will eventually get denied.
According to foreclosureradar, there are 4,047 bank-owned properties in San Diego County, and 20,215 outstanding NODs and Notices of Trustee Sales.
Will the impending flood of REOs depress sales and prices further?
I don’t think so.
I think an increase of foreclosures would IMPROVE the coastal market, turning it into a frenzy-like condition. The lack of well-priced inventory up and down the coast has been very frustrating for summertime buyers, and they’d love to have a shot at buying a well-priced “bank deal”.
The banks are listing their REOs for close-to-retail too, so sales prices would only crash if they did literally flood the market with new REO offerings.
Here are a few examples for evidence that when a decent REO comes on the market.
There were 28 detached north-coastal REOs that closed escrow in the last 60 days, and their average SP/LP was 100%. Fifteen of them sold for OVER LIST PRICE:
| Street Address | List Price | Sales Price | DOM |
| Park | $385,900 | $415,000 | 12 |
| Laguna | $399,900 | $413,000 | 38 |
| Orpheus | $410,000 | $436,000 | 5 |
| Crest | $436,900 | $453,000 | 15 |
| Corte Loma | $446,500 | $448,000 | 2 |
| Olmeda | $479,900 | $551,000 | 20 |
| James | $499,900 | $597,000 | 2 |
| Bressi Ranch | $545,730 | $565,000 | 48 |
| Turner | $559,000 | $562,000 | 14 |
| Contour | $574,800 | $600,000 | 34 |
| Corte Romero | $731,900 | $742,000 | 8 |
| Magellan | $884,000 | $907,000 | 9 |
| Lemon Leaf | $999,900 | $1,008,653 | 18 |
| Cam de Orchidia | $1,299,800 | $1,325,000 | 2 |
| Corte Lusso | $1,757,500 | $1,787,000 | 8 |
It’s safe to say that sales will definitely improve if REOs flood the market – if the bank-sellers need to lower the price to find a buyer, they will. But frustrated buyers just want to buy a house, and if they have to pay list price, or higher, just to get a “bank deal”, they’ve been doing it. It would take a blunder by the banks – unloading hundreds of REOs at a time – to cause prices to plummet.
Jimbo
Also heard today from a well connected realtor…only does foreclosures… 4 weeks is the timeline….then all hell breaks loose.
One thing, if X represents the number of buyers (not wishful people- but actual buyers) how can any price guestimates be provided (by you or anyone else) when X is unknown?
Or do you know what X is? If so, how do you know? Where would one look? Mortgages apps could be a clue but is MBA data divided between refi’s and new buyers etc? Is average sales per month the only way to figure X?
FYI I was referring to this part:
I don’t think so.
I think an increase of foreclosures would IMPROVE the coastal market, turning it into a frenzy-like condition. The lack of well-priced inventory up and down the coast has been very frustrating for summertime buyers, and they’d love to have a shot at buying a well-priced “bank deal”.
LM, lest we not forget that “X” could very well be a declining number.
There’s too much manipulation on both sides still for my taste. But I agree lots of folks would see a deal near the coast and jump if they still can.
We’ll all see what price does soon enough.
LM,
I said that I didn’t think so, which leaves a little room for error, doesn’t it? 😉
I don’t know overall how many qualified buyers are out there, but there are a boatload who are looking, especially in the prime areas.
The other day I showed the 1,700sf house on Carmel Pointe, listed for $675,000. I was there for 15 minutes, and saw SEVEN other groups of buyers come at the same time. It went pending today, after 3 days on market.
Another noteworthy listing this week was the 1,360sf house on Kerwood, it went pending after one day on market, listed for $619,000, and it was a 20 year old bare-bones tract house.
Could it all be ‘seasonal’? Maybe, but how many times this year have you seen a house for sale, either here on the blog or elsewhere, and you said NO WAY, and it sold anyway. I take it easy on you, there have been dozens and dozens of examples of sales that closed this year for prices beyond comprehension. Look at James on this list – closed for $98,000 OVER list price.
“Also heard today from a well connected realtor…only does foreclosures… 4 weeks is the timeline….then all hell breaks loose.”
And there it is folks, just like the realtors 1,234,564 calls of “bottom”, we now have our 355,912 call of the “tsunami is just around the corner”.
No offense to you LM – I have just had it with this whole meme. Ive heard it again and again and again, for what 14-16 months now?
Honestly, I am beginning to think this whole thing might be some weird reverse ponzi scheme causing us all to wait on the sidelines while everyone else picks over whats left.
I mean seriously, what happens if its now 2012 and we still hear “2 months to the tsunami” or “6 weeks to armageddon”?
LM no offense to you – im sure your realtor was well intentioned. But after the 355912 call of its “just around the corner” ive stopped listening.
Sika, I am in agreement with you. Also, not my realtor, just a connection.
I should have mentioned (and the only reason I bring it up now) is that this person for the longest time (over a year) said DON’T even think about buying. So I give them some credit for saying “just around the corner” simply because of their historic statements.
“Honestly, I am beginning to think this whole thing might be some weird reverse ponzi scheme causing us all to wait on the sidelines while everyone else picks over whats left.”
It’s just human nature.
The key question is what exactly is housing in the USA? If it is investment, then by God buy now and as much as is possible.
If the answer is something else, waiting could pay handsomely.
I do not know the answer therefore will no touch a piece of RE now. But I am ok with paying more of wrong.
Jim,
Thanks for your response. I am just trying to wrap my head around this all.
I am coming from a very dire macro-economic basis for my formulations- and I try and mathmatically work these thigns out….thus my fixation on X!!!
Cheers! Sell some houses this weekend!
I live on the Coast in Leucadia and a house down the street from me on 800 block of Hermes 1600sf sold in a week and closed at 1.2 million for an old shack. Double size lot but still had multiples and was not a bank property.
LM – you are doomed!!
The buying of a home has so many components besides price/investment value that it is very hard for analyzers like us to figure it out.
But if you need help for your fixation on X, all you need is a little Johnny Hit and Run Pauline, from last week:
http://www.youtube.com/watch?v=elkTygTYzW4
Hey JIm
where did my great Cali Sheeple post go?
Todd,
That house wasn’t really a shack. It had a lot of character, a great yard, nice pool, a two-bedroom guesthouse, and it’s west of the 5 fwy. The only downsides were that it’s kinda stuck in the cul-de-sac (which some would like) and some surrounding areas are iffy, including the (non-senior, plenty of meth-heads) mobile home park just next door.
Still, we would seriously think of buying it for $800K.
Yes, there are lots of very well-qualified buyers out there who are very anxious to buy a house. Right now, the inventory stinks, and all the govt manipulation is downright frightening.
vegas,
This is my place of business. I don’t walk into your office and insult your clients, don’t do it here.
Everything about So Cal boggles my mind. As much as I would like to figure it out, I never will. For whatever reason, there is plenty of demand to prop up prices, and plenty money(cash) to see it through.
no Problem Jim
I really like your Forum. And I do Appreciate the work you do for it- Lots of good info and insight.
But it is a forum . Forums are for expressing opinions – but anyway.
Maybe the sheeple comment was a little out of line. But you know I am a REO agent also(sold five hundred last year) and see the same thing happen here to a certain extent- but of course here pricing is back to 1999-2000 pricing on every single thing and If you adjusted for inflation it would be around 1988 pricing but.
Of course much Of Our 2003-205 rise in pricing was due to the Cali investors who later swarmed to Phoenix and then Alberquere and Fla. It was funny watching it
I actually have a theory that So Cal is the intial cause of the whole housing bubble and current world crisis. Maybe that is a little crazy too(or is it?) – But it is a opinion.
No Harm done
Have a great weekend
vegas,
I travel for work and tend to agree with you about your theory. For whatever reason SoCal and specifically Orange County seem to propagate a lifestyle that others want to emulate. I don’t get it but I see it all over.
Sales will not be depressed but prices sure will. It’s simple supply and demand. Supply goes up and price goes down. The demand is already there and will still be there, but with more houses to choose from there will be less competition. Seems like a good thing to me.
Don’t be so sure, leave a little doubt.
I sure hope some part of the market opens up soon, either foreclosures or otherwise. I am one of those pent-up buyers and it’s very frustrating when there is so little regular (non-foreclosure), decent quality inventory. Because of this, the too few sellers who list in a desirable neighborhood seem to have the idea they can ask whatever inflated price they want – it must simply be an overly optimistic perception of supply & demand, while comps be damned. Therefore, in such a perverse climate the only place for buyers like me to turn for more fair market prices are foreclosures. The problem is foreclosures are darn hard to snag. So, you either keep trying, or eventually throw in the towel and cough up the dough to some irrationally exuberant seller’s bubble-days price tag; or sit on the side lines indefinitely and do nothing? I wish I had the answer.
I feel your pain, househippie. When did things go crazy, 2005? So some of that pent up demand is people who have been waiting 4 years. My theory, untainted by objective evidence, is that people are willing to pay an extra 3% for every year they’ve waited. 🙂
I’ll wait a little longer, thank you…
Housing Bottom? No, the Mother of All Head Fakes
There’s still ample evidence that neither housing nor the general economy has hit bottom, and I know every time I’ve gotten impatient I’ve gotten burned.
“I think an increase of foreclosures would IMPROVE the coastal market, turning it into a frenzy-like condition.”
Geeeze. Just when I was really starting to respect this blog.
Jim, Not everyone can roll into town with millions in cash to buy these things. How’s the job market looking in S. Cal these days?
p.s.: vegas nrba, my sibling’s NLV neighborhood is already 20% below ’95 pricing — when they were sold brand new.
Not cool, Camacho, not cool.
Respect a difference of opinion. Jim’s a man of integrity, and he calls it like he sees it.
I’m with TJ & tB, and think the wiggle room left in JtR’s initial post speaks volumes. To me, the old adage, that if you don’t understand something you shouldn’t invest in it, applies here.
There is so much uncertainty and manipulation in the markets, huge infusions of cash by the gov’t, unemployment not seen since the Great Depression…etc., etc. that I think it’s a fools errand to jump on a “deal” just now.
Do you believe that all the crooks who made fistfuls of cash these past 6 years are in prison or have left the game? I don’t. These guys are junkies, and they’re still Jonesing. IMO, impatient, irrational buyers are their next fix, and this will be another bubble.
There’s no harm in watching for a resolution to the uncertainty, and renting another 6-12 months to see how the next mortgage reset fully gears up. Unless, of course high stakes gambling still does it for you.
Let’s review:
I said there were ONLY 28 REO sales in the last 60 days. They sold for an average of 100% SP/LP, how many times do you see that? I’ve never seen that.
15 of 28 sold for more than list price!
And the president says he just started having respect for this blog, but now apparently doesn’t?? And then take your shots too?
I deleted three comments today. I don’t think I’ve deleted three comments in the last year. And look at the ones I left!
It is a sad commentary on society that here I am, trying to do some good for people – and be continously attacked personally and unmercifully for doing so.
I’ve turned off the comments, at least for now.