by Jim the Realtor | Apr 1, 2010 | Auctions, Bailout, Buying at Trustee Sale, Foreclosures/REOs, Frenzy, Graphs of Market Indicators |
We could use some good old-fashioned market clearing – maybe this is a start?
JimG brought it up, and our friend Effective Demand has charted the increase in Bank of America foreclosure activity for Southern California – recently their number of auctions has spiked:
More auctions, more short sales, more REOs, let’s GO!
Freddie Mac also announced today:
McLean, VA – Freddie Mac (NYSE:FRE) and New Vista today announced plans to auction hundreds of HomeSteps® REO homes to individual homebuyers in Las Vegas on April 24, 2010 and in California’s Inland Empire on April 25, 2010 in support of the federal Neighborhood Stabilization Program (NSP) and to help more first time homebuyers and owner occupants purchase these homes. HomeSteps is the real estate sales unit of Freddie Mac and markets a nationwide selection of Freddie Mac-owned homes.
Under the 2009 Neighborhood Stabilization Program, homebuyers are eligible for closing costs and down payment assistance when they buy foreclosed or abandoned homes in designated communities that were hit hard by the housing downturn. This federal assistance combined with the federal tax credit will provide the buyer with significant financial advantage in purchasing HomeSteps homes.
“Freddie Mac’s first-time homebuyer auctions in Las Vegas and in California’s Inland Empire builds on our long-standing effort to use our REO inventory to foster new opportunities for new homeowners and shows another way Freddie Mac is working to achieve the Obama Administration’s goals of stabilizing and reviving impacted communities,” said Ingrid Beckles, Senior Vice President, Default Asset Management at Freddie Mac.
“Together with today’s low mortgage rates, these April auctions will enable Las Vegas and Inland Empire families to take advantage of the unique convergence of opportunities that make HomeSteps homes exceptionally attractive values,” said Chris Bowden, vice president of HomeSteps. “Working with New Vista underscores Freddie Mac’s commitment to manage its REO inventory in a way that helps stabilize communities, fosters homeownership opportunities, and responsibly safeguards tax dollars.”
“Owner-occupants are the key to revitalizing and strengthening neighborhoods that have been hard hit by the economy,” said Jim Park, CEO of New Vista. “Working with Freddie Mac, New Vista has created a one day homebuyer event that gives first time and owner occupant buyers an exclusive opportunity to purchase HomeSteps homes. These unique events will help turn hundreds of foreclosed properties into homes for many deserving families.”
New Vista will hold open houses on April 10 and April 17 – 18 in Las Vegas and the Inland Empire so interested buyers can tour the HomeSteps homes before the April 24 and 25 auctions. Potential buyers can also find property descriptions at auction.com/.
by Jim the Realtor | Apr 1, 2010 | Graphs of Market Indicators, Local Flavor, Thinking of Buying? |
From Mr. Nevin at MP Advisors:
With the release of our latest audit for San Diego, we get the most up to date look at the apartment rental market in San Diego. The report reveals a truth that has been true for some time – it is pretty hard to find a better place to own apartments than in San Diego
With over 117,000 units included in the survey, our apartment vacancy rate sits at 4.75%. That would be a desirable rate to have in the best of times, let alone in the face of broad domestic economic adversity. The national vacancy rate is at an all time high of 8%, but that doesn’t even begin to approach the vacancy factors seen in some of the more damaged rental markets.
Our neighbor to the north, the 800 pound gorilla of the apartment world, had vacancy rates nearly a point and a half higher than ours. San Francisco, was over ¾ of a point behind us in vacancy. The only two other major apartment markets in the country competing with us in terms of vacancy are Washington D.C with a 5.9% vacancy rate and New York at 3%. New York will always enjoy the kind of supply / demand ratio to maintain these kind of figures, and the District, of course, operates under virtual economic immunity when a Democratic administration is in office.
During the height of the last decade, many of the Sunbelt markets were seen as darlings for major investment and these markets are in shambles right now. Orlando, Dallas, Las Vegas, Charlotte and Phoenix all have double digit vacancy rates.
The best part of the deal for San Diego apartment owners, is they have been able to keep low vacancy with very little rent concessions. Rents are off 2% from their peak but are 20% higher than they were in March 2005.
Occupancies and rents are only part of the picture though, the other side is the market for buying and selling these projects. The combination of strong operating metrics for apartments in San Diego, weakened cap rates from 2-3 years ago, severely obtunded credit markets and a media proclaimed impending commercial real estate collapse, have resulted in no one selling who doesn’t have to. Since rents are relatively unchanged, NOIs are relatively unchanged and even with 75% LTV financing, these properties do not cash flow much differently than they did 2 years ago. That means very little distressed selling. The majority of distressed apartment sales in San Diego are actually failed conversions.
A search of Loopnet for San Diego apartment projects with at least 10 units that have been listed for sale this year turns up 38 listings. Of these 38, 5 or 13% of them are asking prices at lower than 5 ¼ cap rate and thus are really not doing much more than fishing, that leaves 33 projects for sale. Of the 33, nearly all are “C” properties, at best. Looking for institutional grade apartment projects in San Diego? Better pack a lunch. Further complicating the issue is the fact that there are hardly any market rate apartment projects under construction.
So for those who were fortunate enough to get in the driver’s seat in the San Diego apartment market, their cup overfloweth… for the rest, remember that patience is a virtue.
by Jim the Realtor | Mar 2, 2010 | Graphs of Market Indicators, Market Conditions, Neg-Am, Option-ARMs |
Our old friend Zach Fox has moved on to more illustrious things than the NC Times, he now works for a big-time financial publication back east.
But he hasn’t forgotten us little guys, especially the data geeks:
Jim,
We’re finally sending out some free links as we move toward getting our brand more to the public and not just Wall Street. I thought these stories might interest you and was hoping to piggy back on your ever-growing fame:
I got an update on that infamous Credit Suisse ARM reset chart, along with some interesting speculation from Greg McBride at Bankrate:
http://www.snl.com/interactivex/article.aspx?CDID=A-10770380-12086
I also thought this piece by one of our banking/insurance gurus was interesting. It runs through responses to FDIC’s securitization reform:
http://www.snl.com/InteractiveX/article.aspx?CDID=A-10788544-11055
Also, here is our bare-bones free site that has some TARP info. News is on the left-hand side, let me know if you see any links you can’t click on and would like to check out:
http://www.snl.com/Sectors/Financial-Institutions/FIG/Home/Tarp.aspx
Best,
Zach
by Jim the Realtor | Dec 23, 2009 | Forecasts, Graphs of Market Indicators, Market Conditions |
What can we expect for 2010? Let’s review the stats (2009 numbers are up-to-this-morning):
| SD County Det. |
2007 |
2008 |
2009 |
| Total listings, year |
46,056 |
42,567 |
33,573 |
| Total closings, year |
15,713 |
19,103 |
21,594 |
| 4Q Closings |
2,965 |
5,450 |
4,891 |
| 4Q $$-per-sf |
$329/sf |
$233/sf |
$244/sf |
| 4Q SP:LP |
95% |
98% |
100% |
| 4Q Avg. DOM |
71 |
62 |
58 |
Even though we’ve had 20% fewer listings this year, detached closed sales have already surpassed last year’s total. It looks like the intensity is rising, but is it? We saw on video a bunch of high-enders get marked pending recently, has the whole market been cooking?
Here are the number of detached homes that were marked pending each month:
This month’s decline of new pendings could have been due to buyers rushing to buy in the previous months due to the tax credit, or just sheer exhaustion of seeing few deals and lots of junk all year. Plus, 92% of this month’s new pendings are still pending, where most of the previous months have already closed. The final tally for December is likely to be under 900.
While there’s been a flurry of activity since the first quarter of 2009, it looks like we lost some momentum right here at the end. But if there were more good homes for sale at attractive prices, sales would be better. The latest tsunami warning from B of A is to expect an upsurge in REO listings around April 1st, which will likely be another cruel April Fool’s Day joke. As long as the inventory is restrained, the market’s urgency is likely to stay like we’ve been seeing it – full of frustration and anxiety!
by Jim the Realtor | Dec 8, 2009 | Graphs of Market Indicators, North County Coastal, Sales and Price Check, Thinking of Buying? |
How much worse could the local real estate markets get in 2010?
The folks at TransUnion noted last week that approximately 10% of California mortgage borrowers were at least 60 days late in the third quarter of 2009:
Let’s try to quantify what that means for the near future, and 2010. How many more homes are lurking in the inventory shadows?
Can the local markets handle more distressed inventory?
The city-data charts show how many people in each zip code have a mortgage. Hypothetically, let’s take 10% of the total mortgage holders in each zip code, and compare to the MLS sales, Y-T-D:
| Zip Code |
60-day lates |
MLS Sales YTD |
| 92009 |
981 |
587 |
| 92024 |
868 |
459 |
| 92130 |
661 |
572 |
| 92067 |
141 |
98 |
It looks like the local markets could have to endure substantial increases in distressed offerings next year. How many have already received a foreclosure notice, and are on the NOD or NOT lists?
60-day lates – NOD/NOT = Shadows
| Zip Code |
60-day late |
NOD+NOT |
Shadows |
MLS Sales YTD |
| 92009 |
981 |
422 |
559 |
587 |
| 92024 |
868 |
314 |
554 |
459 |
| 92130 |
661 |
283 |
378 |
572 |
| 92067 |
141 |
63 |
78 |
98 |
With the truth finally coming out about how lousy the loan-mod results have been, you can’t really hope that many of these defaulters will find a way to save themselves. Even if there are a few who are just loan-mod bluffing, and are willing to go back to making their regular payments instead of being foreclosed, it can’t be many – maybe 10% to 20% tops?
For things to stay the same in 2010 as they were this year, the banks will either have to slow down the drip, or regular sellers will have to step aside to let the distressed sales through. I don’t think either one of those will happen – it’s been surprising to me how many regular equity sellers have been willing to sell these days. I’ll try to get a count of those next, but any way you look at it, next year should bring relief for buyers!
by Jim the Realtor | Oct 12, 2009 | Foreclosures/REOs, Graphs of Market Indicators, Strategic Defaults, Thinking of Buying? |
I hate these general nationwide articles, but the graph was pretty – plus I figure that Ronald McMansion was biting his tongue on this one, from WSJ.com:
http://online.wsj.com/article/SB125530360128479161.html
An excerpt:
Foreclosures are rising in more expensive markets as home values in those areas fall, leaving more homeowners with mortgages that exceed the value of their properties. Prime loans accounted for 58% of foreclosure starts in the second quarter, up from 44% last year, according to the Mortgage Bankers Association. Subprime mortgages accounted for one-third of foreclosure starts, down from one-half last year.
The prime category includes so-called exotic mortgages that were increasingly used to buy more expensive homes, including interest-only mortgages that allowed borrowers to defer principal payments during an initial period. Borrowers often aren’t able to refinance out of these products because the drop in home values has left them with little equity in their homes.
Default rates are particularly high and expected to rise on option adjustable-rate mortgages, which allow borrowers to make minimum payments that may not cover the interest due. Monthly payments can increase to sharply higher levels after five years or when the outstanding balance reaches a certain level. A study by Fitch Ratings found that 46% of option ARMs were 30 days past due last month, even though just 12% of such loans have reset to higher monthly payments.
Zillow estimated that nearly one in four homes with mortgages was worth less than the value of the property at the end of June. Mr. Humphries said he didn’t expect to see foreclosure volumes level off until later in 2010.
by Jim the Realtor | Sep 15, 2009 | Graphs of Market Indicators |
All that matters to most buyers is the flow of new REO listings – has the flood started?
San Diego County, Attached and Detached REOs:
| Week Of |
# REO New Listings |
# REOs Marked PEND |
# REOs Closed |
Closed $/sf |
| 6/29-7/4 |
206 |
189 |
224 |
$161/sf |
| 7/5-11 |
229 |
236 |
230 |
$166/sf |
| 7/12-18 |
243 |
227 |
212 |
$178/sf |
| 7/19-25 |
229 |
252 |
242 |
$166/sf |
| 7/26-8/1 |
211 |
233 |
317 |
$198/sf |
| 8/2-8 |
211 |
232 |
177 |
$168/sf |
| 8/9-15 |
198 |
256 |
172 |
$167/sf |
| 8/16-22 |
191 |
189 |
206 |
$170/sf |
| 8/23-29 |
208 |
216 |
230 |
$182/sf |
| 8/30-9/5 |
196 |
237 |
243 |
$172/sf |
| 9/6-12 |
177 |
208 |
107* |
$176/sf |
* late-reporters should fill this out, but will it get to 200?
If anything, the REO market is slowing down a little, not speeding up.
by Jim the Realtor | Aug 25, 2009 | Graphs of Market Indicators, Thinking of Buying?, Thinking of Selling? |
from Rueters:
Prices of U.S. single-family homes rose for the second consecutive month in June, adding to evidence that the three-year housing slump is easing, Standard & Poor’s reported on Tuesday.
The S&P/Case-Shiller composite indexes of 10 and 20 metropolitan areas both rose 1.4 percent in June from May, almost three times the 0.5 percent increases of the month before. May’s increases were the first in nearly three years.
S&P also said its U.S. National Home Price Index recorded a 14.9 percent decline for the second quarter, compared with a 19.1 percent year-over-year drop in the first quarter.
Compared with the first quarter, though, prices rose by 2.9 percent, marking the first such increase in three years.
Don’t get too excited, San Diego’s June number was 146.09, a measly 0.67% increase from May’s 145.12 – we’re all the way back to March’s number!
Take it all with a grain of salt, with emphasis on the local numbers. Like these from Altos Research:
Sellers gravitate towards the good news only – expect that their confidence will be artificially inflated, like a lot of other things.
Places like Oceanside may be hot with FHA/VA buyers, causing some wild blog stories, but looking at these graphs, there doesn’t appear to be much pricing pressure in Carlsbad (or other similar areas). The shorter-term will have some spikes, but the 90-day is the trend.
We might see a flurry or two, here and there, but it would take a consistent string of months’ or years’ worth of improvement before many will be impressed.
People with bigger down payments are choosier, which keeps a lid on pricing.
by Jim the Realtor | Aug 11, 2009 | Contests, Graphs of Market Indicators |
From our friends at housingtracker.net:
http://www.housingtracker.net/asking-prices/san-diego-california
In August 2007 there were over 20,000 homes for sale, and today there are 11,457:
**************************************************************************************
Causing sellers to be more optimistic with their list prices recently:
***************************************************************************************
Though with 22,462 houses and condos on foreclosureradar’s list of NODs, NOTs, and REOs, there has to be relief ahead, doesn’t there? Typically in January we see the low inventory count for the year, before the spring kick.
Let’s use the active inventory as one of our primary indicators.
We’ve seen over the last few months how frenzied up buyers can get when there are few homes for sale. If we head into the 2010 spring kick with an ultra-low inventory and decent interest rates, it’s going to be off to the races.
If there is a surge of REOs over the next six months, and we head into the spring with a bloated inventory, then we could slog along.
We’ll probably know where we stand by the holidays.
Housingtracker’s average for last December was 15,116 homes for sale, and today’s count is 11,457 listings.
If the active inventory is rising by the holidays, then trouble is brewing, because normally the inventory declines towards year-end. If there are fewer homes on the market in December than there are today, then the spring kick should be lively – any increase in REO inventory could correspond with the usual seasonal boost.
Where do you think we’ll be?
Guess how many attached and detached active listings there will be on the morning of December 1st, and the closest guesser will receive two tickets to a Chargers game!
We’ll have an instant winner too – the best explanation for a guess will receive four Padres tickets for Saturday August 22nd vs. Cardinals at 7:05pm!
by Jim the Realtor | Aug 10, 2009 | Graphs of Market Indicators |
After the display of quarterly sales, reader ‘propertysearch’ asked about the pricing curve.
The cost-per-sf measurement is an imperfect tool when analyzing individual homes, there tends to be a complexity of other factors that weigh into the buying decision. But here it charts the trend fairly well of the quarterly detached home sales from Carlsbad to Carmel Valley:
Was last quarter just a blip in the downward trend, or is the trend looking for the floor?
********************************************************************************************
How much do the higher-end homes skew the chart?
Of the 506 houses that closed last quarter, 130, or 26% were over $1,000,000.
Below $1M = $309/sf
Above $1M = $533/sf
Maybe I should split them, and do two charts?
