Last week we saw that the newer 2,700 square-footers in Carmel Valley were a hot commodity, and holding steady in the $800,000s.
What do you get for less?
Here’s a youtube video of three houses, two that just went pending, and one that closed, in the $600,000 to $700,000 range:
In other news, the median sales price has gone up four months in a row, which has some babbling.
From sddt.com:
“You have a floor,” said Louis Galuppo, a practicing real estate attorney and director of residential real estate at the University of San Diego. “Last year, (in July) prices were dropping in certain places and that’s not happening in certain areas now. In fact, that’s not happening in a lot of areas under $500,000.”
“The market can handle it all day long right now,” Galuppo said about the short sales and foreclosures that could come onto the market. Galuppo said people were afraid when foreclosures started coming into the market significantly last year, but since then those fears have been quelled — for the most part.
While uncertainties about the housing market and economy loom, some buyers have seen value with current home pricing as demonstrated by the 117 offers made on a Clairemont-area home last month.
From the North County Times, noting the 21% increase:
North County’s median house price rose to $440,000 in July, the fourth month in a rebound from a historic crash, an industry group reported Tuesday. The monthly HomeDex report released Tuesday by the North San Diego County Association of Realtors showed the median price of single-family homes rising from $415,000 in June and from $364,000 in March, its lowest level in six years. The $235,000 median for condominiums and town homes remained about 7 percent below month-earlier and year-earlier levels.
The market for mid- and low-priced homes is “red hot,” said Jim Klinge, a Carlsbad real estate agent who viewed the high home prices of 2004 and 2005 with skepticism.
But Klinge cautioned against putting too much stock in the month-to-month changes in HomeDex’s median, the level at which half of the sales were for greater amounts, and half for less. Klinge said sellers of luxury homes are beginning to drop their prices as the end of the summer selling season approaches. The late summer rush at the top end may have skewed median prices upward, he said.
“(Sellers) are thinking, ‘If we’re going to do something, we’d better do it now,'” Klinge said.
Nearly 8 percent of San Diego County mortgage borrowers are at least 90 days behind on payments, and thus in imminent danger of foreclosure, according to First American CoreLogic, a mortgage research firm.
A new report concludes the level of commercial loan defaults accelerating, but whether that means a surge of commercial foreclosures in San Diego depends on who is assessing the data. Nationally, the Deutsche Bank report noted more than $2 trillion worth of commercial paper is set to mature between now and 2013, and as much as $450 billion would not qualify for refinancing under current criteria.
“This downturn may well exceed 2001-2003 when cumulative default rates reached nearly 25 percent,” Deutsche Bank stated.
The bank said the national commercial delinquency rate reached 4.1 percent as of the end of June. While year-to-year figures weren’t immediately available, that rate was some 3.5 times higher than December.
The bank identified some 2,158 delinquent commercial mortgages representing $27.9 billion in instruments nationally as of the end of June.
The commercial foreclosure activity has been robust enough here that Del Mar Heights-based Trigild, a receiver and distressed property specialist, has expanded its headquarters to accommodate more project management and accounting personnel.
Bill Hoffman, Trigild president and CEO, said in a prepared statement that his company’s portfolio of properties has grown significantly over the last year, and now represents more than $2 billion in defaulted commercial loans. These include the hospitality, commercial office and retail, multifamily and unfinished development sectors.
Hoffman doesn’t expect the distressed commercial property business to slow down.
“Tight credit markets will continue to hinder investors’ ability to pay off loans, and as a result, the rate of commercial defaults is soon expected to top 5 percent,” he said. “With this in mind, we are anticipating a dramatic influx of business in the coming months, and are growing our firm and service to accommodate new clients and employees.”
Jamie Dick, a Newmark Realty Capital Inc. senior vice president, suggests that while commercial foreclosures, particularly when they involve payment defaults, are inevitable in many cases, commercial lenders who are faced with loan maturity defaults — a big balloon payment at the end _ are likely to be more accommodating.
“If the lender forecloses, what are they going to do with it?” Dick said. “There’s a saying going around. It’s called ‘extend and pretend.’ They extend hoping that things will be better when the loan matures again. We are seeing a lot of banks work with borrowers.”
However, Dick said there is a shrinking pool of lenders willing to refinance, meaning some will foreclose rather than attempt a workout. With the commercial mortgage backed securities market effectively dead, finding lenders who will loan at all has become increasingly problematic.
“I’d say that 2007 was the last normal year as far as the CMBS market goes. If you looked at a pie chart you’d see that up until then, CMBS was 65 percent of the market, so you can imagine all of that disappearing,” Dick said.
Dick said that CMBS was a $19 billion market in 1999, but reached $230 billion by 2007.
“And wait until 2017 when all the loans from 2007 will be coming due.”
Some loans are still available. Dick noted that lenders have shown a willingness to provide as much as $5 million, but with very few exceptions, getting access to more capital than that has been extremely difficult. When asked when capital will begin to flow more easily, Dick said it could be years from now.
“I think it’s like an icicle. It will melt, but it will be one drop at a time,” Dick said.
While there are pockets of overbuilding such as the Carlsbad and Interstate 15 office markets and the Otay Mesa industrial market, Dick said San Diego generally doesn’t have the surplus of space, currently the case in markets such as Phoenix and Las Vegas.
“Mainly, we just ran out of places to build. For example, we didn’t have all that land to build shopping centers,” he said. Dick said although some centers are hurting with the loss of some major tenants such as Circuit City, the retail vacancy is 6 percent at most – still a very healthy figure.
This house is located near the intersection of Ave T and Van Sicklen:
Occupying what used to be a driveway, it’s a 1br/1ba home on a parcel of land 7.25 feet wide and 113.67 feet long. The interior area is just under 300 square feet:
The living room, looking towards the front of the house:
From the living room looking back:
They’ve managed to fit a washer and dryer into the kitchen!
The bedroom comes with a Murphy bed, which is a necessity in such a space. Here it is down:
The bedroom with the Murphy Bed retracted:
You also get some patio space in back, looking towards the house:
And here’s the patio looking towards the back:
Here are the home’s ‘Listed Features’:
* Completely redone top-to-bottom, front-to-back!
* Tumbled stone entrance walk
* Renovated Bath
* Renovated Kitchen with new stove, new cabinets and new stacked washer/dryer
* Bedroom with Murphy Bed + ‘Built-ins’ … (doubles as a den)
* Walkout to fenced patio
* 100 Amp service
* 2 Satellite Dishes and Receiver
* Window Air Conditioner Available
THE PRICE ? ? ?
JtR note: If your house isn’t selling, and you are thinking of renting it instead, base the decision on your encumbrances, and your ability to hold out. If you can have a positive cash-flow from renting, then great, consider the joys of being a landlord, and plan to hunker down for the long-term.
But the sellers who are highly-encumbered should sell now, because your selling difficulty will remain high in the short-term (next few years) due to:
a. Trying to sell a tenant-occupied property (they usually don’t show as well, or as easily).
b. Trying to sell a previously-tenant-occupied property (tune-up costs + monthly payments add up).
c. Any combination of lower prices or higher interest rates.
Sell for what you can get today, or risk selling after one (or more) of those impact you.
The country is finally starting to see some positive signs in the housing market. But don’t tell that to Treasury Secretary Tim Geithner, or the countless other Americans who still can’t sell their homes.
After leaving the tony New York City suburb of Mamaroneck to take his new post in Washington, D.C., Geithner put his five-bedroom Tudor home on the market for $1.635 million.
That was in February. By May, he cut the price $60,000 but still got no takers. A few weeks later, May 21, the home in New York’s Westchester County was reportedly rented for $7,500 a month.
“Mr. Geithner’s house is a textbook example of what is happening in the market here,” said Leah Caro, president of Bronxville-Ley Real Estate and president of the Westchester Board of Realtors. “Many sellers are bringing their houses on [the market], finding that they don’t have a buyer for it, making price adjustments in hope of luring a buyer into the marketplace. In the case of Mr. Geithner, he had to move. And renting was his best option.”
Many properties in the suburbs north of New York City are on the market both for rentals and sale, real estate agents there said.
“Sellers who are trying to sell their houses and may not be able to, have decided that getting some money every month is better than getting no money, particularly in the case of vacant homes or owners who are relocating,” Caro said.
And while $7,500 a month might seem a lot to rent Geithner’s 3,600-square-foot home that includes an eat-in kitchen with black granite countertops, it probably falls short of his monthly expenses for the house.
Records show Geithner and his wife, Carole Sonnenfeld Geithner, paid $1.602 million for the home in 2004. The couple have two loans totaling $1.25 million and pay about $27,000 a year in property taxes.
Scott Stiefvater of Stiefvater Real Estate in nearby Pelham, N.Y., said that rentals right now are surpassing the sales.
“The renters are coming in in droves. There are people coming in from Argentina, London, all over the country, all over the world and they’re coming to Westchester and they’re looking to rent before they buy,” Stiefvater said. “People are still waiting for the bottom and they just haven’t seen the bottom, so they don’t want to invest all their money in real estate yet.”
Some people are signing rental leases with the possibility of buying at the end of the rental term, he said. Other clients come in and try to see which of the sellers might be willing to rent, instead.
In that kind of market, it was probably wise for Geithner to rent. His last asking price was already $27,000 less than what he paid five years ago for the house. Add in any improvements he made to the home and a broker’s fee — up to $90,000 on a sale like that — and Stiefvater said he could be anywhere from $200,000 to $400,000 in the hole. That’s about the size of his down payment.
“I don’t think anybody’s in a position to say that he overpaid, or anybody overpaid, when he bought his house because market value is market value,” Stiefvater said. “Back in the those days, everybody was overbidding — I’m not saying overpaying, but overbidding — and getting into bidding wars and multiple offers escalated the sale prices to what I think was higher than market value.”
Stiefvater said renting was a “wise choice” for now.
“If the market continues to go down, as some are saying, and he loses his tenant next year and can’t find another tenant to pay him the $7,500 that he’s getting now … that’s a different story,” Stiefvater said. “The market is overflowing with similar houses and he’s not prepared to reduce his price to reflect the true market value.”
Foreclosures in San Diego County reached their highest monthly totals since September 2008, while notices of default spiked after two months of decline.
June’s 3,715 notices of default were the second highest total for a single month on record. The figure is a 12.9 percent increase from May.
Year over year, June 2009 had 8 percent more notices of default than June 2008. Year to date, notices of default are outpacing their 2008 totals by 7 percent.
The 1,799 trustee deeds filed in Junewere78.6%higher than May’s filings.
The increase in trustee’s deeds filed is not surprising after March’s record-breaking number of 4,260 notices of default filed.
“It’s a great puzzle,” said Alan Nevin, director of economic research for MarketPointe Realty Advisors. “Between the combination of lenders not being able to handle the current workload in addition to the Obama plan coercing lenders to be more kind, we don’t know what the hell’s happening out there.”
By 2012 we may finally get back to blissful boredom. With any luck, three years should be long enough for the U.S. economy to recover and for the nation’s housing inventory to shrink to more normal levels. At that point, housing will return to its old ways, with prices governed not by national mood swings and global credit crises but by local issues ranging from zoning to immigration to job growth.
Prices? While they’re likely to keep falling a while longer under the weight of foreclosures, the market is definitely closer to the bottom than the top. “We expect prices to drop for another year and then stabilize before starting to rise with incomes,” says Standard & Poor’s Chief Economist David Wyss. Moody’s Economy.com predicts the S&P/Case-Shiller U.S. National Home Price Index, maintained by data specialist Fiserv, will fall about 16% this year before regaining ground.
While the year 2012 sounds sexy enough to sell some magazines, all of these forecasts sound safe and vague – if any of them end of being right, it’ll just be luck.
They also included the list of places where it would be ideal to start over, for those who are looking to leave – none of their picks were in California:
Hat tip to Kwaping for sending this along, from the U-T:
The real estate slump has arrived in La Jolla, Rancho Santa Fe and other high-end San Diego County neighborhoods.
After holding their own in sales strength, sales of homes priced at $1 million or more started to fall a year after lower-priced homes hit the skids.
Now, instead of selling their multimillion-dollar homes at multimillion-dollar profits, some sellers are taking a bath or renting their properties while they wait for a sunnier day.
“The market is terrible,” said Jan Paulin, 58, who bought his 4,164-square-foot home on Hillside Drive in La Jolla for $2 million in 2000, put it on the market for $4.5 million last year and is now hoping to get $3.8 million.
If Paulin doesn’t get what he wants, he plans to rent it for $10,000 a month. Other high-end owners are following the same strategy, area agents say.
“I’d rather hold on to it for a while and wait it out until the market turns, and we can get some revenue in the meantime and at least cover the carrying costs,” Paulin said.
Yesterday in the Cielo project east of Rancho Santa Fe, Bill Menish, a former local TV anchor turned auctioneer, conducted an auction for a 5,000-square-foot home bought for $2.65 million in 2001. The highest bid was $1.965 million, which took 20 minutes to reach and was close to the seller’s reserve.
“The owners have a lot of equity in it, have moved into another house and would like to take their capital and move it into an alternative investment,” said listing agent Bill Taylor.
Through the first four months of the year, 337 homes priced at $1 million or more closed escrow, down 52.4 percent from the same time last year, according to MDA DataQuick.
Over the same period, sales of homes less than $1 million totaled 10,987, up 37.5 percent. The overall median price in April was $290,000, down 44 percent from the peak of $517,500 in November 2005.
“The low end has been driving the county sales higher, while the luxury market has typically remained extremely sluggish,” said DataQuick analyst Andrew LePage, adding, “Wealthy folks have taken huge hits that they haven’t taken in a long time, if ever.”
Obviously, the top end represents a small fraction of the local inventory. According to Zillow, 44,500, or 5.9 percent of the nearly 750,000 homes the online company tracks locally are worth $1 million or more. They are generally concentrated in coastal communities with a few scattered throughout the rest of the county.
But of the 13,010 homes on the local multiple listing service last week, 2,537, or 19.5 percent, carry asking prices in the seven figures. The National Association of Realtors reports that the national share of sales above $750,000 is half of what it was two years ago.
In San Diego County, the drop-off of sales of homes at $1 million or more is even more dramatic, down from 73 percent this year from 2006’s peak rate.
“I’ve been doing this since 1975 and never seen anything quite as volatile,” said Willis-Allen Real Estate agent Linda Daniels.
Daniels said buyers are playing it cool, offering 40 percent below asking price and walking away if sellers don’t cave.
“It’s wild,” she said.
And yet, Mike O’Brien, 38, wasn’t fazed when he put his waterfront home in Bird Rock up for sale for $8 million, three years after moving in. O’Brien and his wife, Julie, 34, paid $6.4 million and put $1.5 million into improvements.
“We’ve had a lot more showings recently,” said O’Brien, an online business entrepreneur. “I feel like we’re seeing more serious buyers. One group has come back three times.”
The O’Briens are selling because they are expecting their fourth son and would rather move than remodel.
O’Brien said the subject of real estate hardly comes up in conversations with friends: “The only thing families talk about less than sex is finances.”
There are several reasons behind the woes faced by the wealthy, experts say. Upper-end buyers have lost money in the stock market, have less to spend and, like many other San Diegans, are worried about their job security.
Those who are able to buy find that a “jumbo” loan — more than $697,500 — is hard to get and carries a premium interest charge of one or more percentage points above the norm.
“The jumbo market is not functioning,” said Lawrence Yun, chief economist at the National Association of Realtors. “We hear from our members every day — ‘Fix the jumbo market, fix the jumbo market.’?”
“You can’t buy today because you can’t get a loan, no matter how golden you are,” said Maxine Gellens, an agent with Prudential California Realty in La Jolla.
When their offers are accepted, buyers sometimes have to endure multiple appraisals by lenders before a loan closes. “It is definitely becoming more difficult to find good comparable sales for the variety of characteristics that million-dollar properties present,” said David Eshelman of Eshelman Appraisals Inc.
The problem is most critical for what David Adamo, president of Luxury Mortgage in Stamford, Conn., calls the “HENRYs” — “high-earning but not rich yet” dual-income households — those who earn between $250,000 and $500,000 annually. They can’t buy what they want because of the difficulty of securing a jumbo loan.
To get around the financial roadblocks, some buyers have enough assets to make all-cash offers.
“Cash buyers are getting wonderful values because they can pull the trigger,” said Lou Martin, a Prudential agent in Rancho Santa Fe.
As for the future, history does not portend good times for the rest of the year. Since 2001, the proportion of million-plus homes sold in the first four months was always higher than in than the last eight months, except in 2002 to 2004.
If that trend continues this year, the 2.98 percentage share this January-April would be the high point of the year.
Andy Nelson, president of Willis Allen, said top-tier buyers may upend history as they survey the relative bargains available and press sellers to lower prices even more than the 20 percent to 25 percent reduction so many already have absorbed.
“Yes, their existing homes may not be worth as much, but there are some great values out there to upgrade their location or move to a house on a single level,” Nelson said. “They may have an opportunity in the next few months to get something because we think the bottom is close at hand.”
The pace of housing sales has been rising in many markets this year, but it is only partly because families seeking affordable housing are returning to the market.
It also is because of investors like former Deutsche Bank managing director Matthew Cooleen, whose firm has spent $30 million buying pools of foreclosed houses from banks.
His newly formed Greenwich, Conn.-based firm, HudsonCross Financial, is betting it can make a profit reselling in beaten-down markets in states like Nevada, Arizona and Florida and in Southern California because it is paying so little for the homes.
Outside San Francisco, a former Morgan Stanley executive director’s new firm is buying four houses for 75% less than they cost four years ago, and is raising $6 million to purchase others.
In Phoenix, Mark Allen, a former division president at D.R. Horton, the nation’s largest home builder, is reselling homes he is buying at courthouse auctions with funding from Gorilla Capital, an Oregon-based firm that targets foreclosures. “It’s the only way to make money in Phoenix residential real estate right now,” Mr. Allen says.
Below: Gorilla Capital’s Mark Allen, center left, attends auction for foreclosed homes in Phoenix on Monday.
After mostly retreating from the housing market after the bubble burst, investors are returning in droves, hoping to take advantage of the distress. In many cases, Realtors say, investors also are outbidding first-time home buyers and other would-be occupants because they often come to the table with all-cash offerings.
Some of the new investors profited while home prices boomed and are now trying to cash in on their decline. Far from their trading rooms and executive suites, some are spending their days looking for deals in far-flung suburbs and staking out courthouse auctions.
While many real-estate trade groups don’t track investor purchasing on a monthly basis, real-estate agents in many markets say investor buying is high. One telltale sign is how many home buyers are paying all cash.
Though not every cash sale involves an investor, the investors often use cash because they can close quicker and get a better return. In the Phoenix area, for example, about 38% of April sales of single-family homes were all-cash deals. In Punta Gorda, Fla., the figure was 67%, and in the Las Vegas area, total cash sales were 39%.
It isn’t the easiest way to earn money. Managing a far-flung collection of houses can be time-intensive and fraught with hidden costs.
Buying houses, rather than apartment buildings or other commercial property, tends to favor small investors who are agile and understand local submarkets. The work often involves replacing carpets, repainting and kicking out squatters. Much of today’s buying is being done by mom-and-pop investors, who are acquiring a few houses to rent out.
But in some markets, where prices have fallen the most, the bargains are difficult to pass up for larger investors.
“Foreclosures are low-hanging fruit at the moment,” says Laurence Pelosi, who helped close big land and housing-development deals for Morgan Stanley before he left the bank earlier this year and joined McKinley Partners, a small investment firm that is buying foreclosures in California.
McKinley and a partner are in contract to buy four homes in Pittsburg, a small city east of Oakland. The firm is buying one house, which was valued at $412,000 near the peak in 2005, for $84,000. McKinley plans to rent out the homes for as much as $1,200 a month. After paying to manage the property and other expenses, it expects 5% to 7% returns on its investment from the rental income and, hopefully, a big payoff from a resale when the market improves.
The firm is paying cash up front, but has a commitment from One California Bank, an Oakland-based community bank, to finance 50% of the purchases after they close. They hope that will free up cash to buy more homes.
The firm believes homeowners losing their houses in foreclosure actions need places to rent.
“It’s tough times in the Bay area, but this isn’t Detroit,” says Paul Staley, who acquired distressed homes earlier in the decade with Fortress Investment Group and recently teamed up with McKinley. “Everyone is going to need a place to live.”
McKinley plans to resell the houses in about five years for double what it paid and is targeting 20% annualized returns for its investors, which include wealthy individuals.
HudsonCross Financial is buying pools of 10 to 200 homes. “It only makes sense if we buy in bulk,” says Mr. Cooleen, who worked in the structured credit trading group at Deutsche Bank that dealt in credit derivatives and mortgage-backed securities.
About 40% of the banks and lenders Mr. Cooleen deals with are agreeing to sell homes in bulk, but the others are reticent, he says, because they believe they can get better prices if they wait to sell them individually.
“It’s a shame. The sooner we clear the inventory of foreclosure the sooner the housing market can recover,” says Mr. Cooleen.
The competition for the houses is intensifying as the supply of foreclosed homes in some places has fallen in recent months.
But the inventory is likely to rise later this year as banks end their moratoriums on new foreclosures and begin dumping additional houses on the markets.
Barclays Capital estimates that banks and loan investors owned 765,500 foreclosed homes as of April 1, up from 629,100 a year earlier. The inventory is expected peak at about 1.3 million homes in mid- to late 2010, according to Barclays.
The investors are no panacea to the nation’s housing woes. When the market improves, many of them could put their houses up for sale, reinflating supply.
“All this investor buying isn’t depleting supply, it’s only shifting it around,” says Mr. Allen of Gorilla Capital.
San Diego, like many metropolitan areas, has been slammed by the housing market’s decline.
But if reports are right, the area may have already bottomed out at a much more affordable levels.
This assessment was made during the UCLA Anderson Forecast conference at the San Diego Marriott Hotel & Marina Friday.
Peggy Johnson, a Qualcomm executive vice president, said while the decline in the housing market has been bad news for many, she likes the fact San Diego is now a much more affordable market.
“We couldn’t attract talent here due to the cost of housing,” Johnson related.
The California Association of Realtors (C.A.R.) reported that a starter single-family home was affordable to some 61 percent of San Diego region households in the first quarter of 2009.
The affordability rate was closer to 20 percent as recently as three years ago.
Jerry Nickelsburg, a UCLA Anderson senior economist, said the decline does seem to be leveling off. He added however, that it might be a while before housing construction picks up again.
A UCLA Anderson Forecast document projects permits for a total of 56,000 housing units of all types will be pulled between this year and 2013 in San Diego County. The Construction Industry Research Board reported permits for only 5,155 housing units were pulled in 2008. This was the lowest figure in at least a decade.
Nickelsburg said while there could be some modest rebound in residential construction by early next year, he doesn’t expect the building activity to build up a full head of steam before 2011.
“There are a lot of lost construction jobs. You might have a plumber who was working for a homebuilder who got laid off, tried going out on his own, but was unable to make it and is now among the unemployed. It has been difficult out there,” Nickelsburg said. “Home prices have fallen way back and they have remained soft.”
Mark Schniepp, a Santa Barbara-based consulting economist to UCLA Anderson, added that following a 45 percent drop within the past two years or so, he believes prices have bottomed out.
Nickelsburg did say that with few homes being constructed and population continuing to grow, a “huge pent-up demand for housing” is in the process of developing. Schniepp sees this as well.
“Unsold housing is starting to diminish. The existing inventory is getting depleted and it may already be too late to get the best deal,” Schniepp said.
Schniepp, who believes that housing is poised to recover now, nevertheless expressed some concerns about a recent spike in notices of default.
Both Schniepp and Nickelsburg said they believe the defaults shouldn’t return in waves the way they did during the past year, however. “We’re starting to get these defaults behind us,” Nickelsburg said.
Schniepp said the good news for San Diego County is the housing meltdown started earlier here than it did in most other parts of the country and should thus rebound sooner.
“Housing is poised to recover pretty early,” Schniepp said.
Schniepp said we are far from out of the woods yet noting that while home resales increased by 134 percent between the first quarter of 2008 and the first quarter of 2009, most of these were bank owned sales or short sales of properties that were in trouble.
“Homeowner distress was moderating, but it recently rebounded in February and March of this year,” said a UCLA Anderson Forecast document. “Defaults are rising but foreclosures have not followed. The recent (federal) Homeowner Affordability and Stability Plan, which is targeted to prevent foreclosures by modifying loans or postponing mortgage payments for delinquent homeowners is now just gaining traction. It may help to prevent a sizable portion of defaults from evolving into foreclosure.”
The report said if the number of foreclosures does decline, housing values will stabilize and bank-owned transactions at fire sale prices will no longer impact the market.
“We need to turn these into non-distressed sales so we can turn things around,” Schniepp said.
If that happens, Schniepp said the San Diego region could see the beginning of a housing recovery by mid-summer.
Notices of default fell 13.8 percent while trustee’s deeds increased 17.1 percent from March to April, according to statistics from the San Diego County Assessor. Although trustee deeds increased from a two-year low of 844 to 988, the number is still well below the 2008 average. Conversely, the 3,673 notices of default, or NODs, filed in April were the third highest total to date, coming off two months of consecutive highs.
Foreclosure moratoriums toward the end of 2008 are the likely cause of both trends. The moratoriums led to a slowdown in notices of default from September to November 2008. Many NODs filed during that time period have worked their way through the typically 90-day foreclosure process, resulting in them becoming trustee’s deeds.
Trustee’s deeds are the last step in the process before a home becomes bank owned.
Year-to-date, the number of NODs filed in 2009 are outpacing 2008 by 10 percent. There have been 14,693 filed this year.
There has been an 18 percent decline in trustee’s deeds year-to-date from 2009, however, with 4,522 filed since January.
The lower number of trustee’s deeds resulted in one of the lowest inventory totals in months, said Alan Nevin, director of economic research with MarketPointe Realty Advisors. That, coupled with a recent surge of offers coming in for lower-priced homes, could cause an eventual spike in pricing.
“At some point, and I wish I could give you the date, but there is going to be a couple of major jumps in price,” he said. “It’s not going to be a matter of homes creeping up $5,000 or $10,000, there’s going to be a couple of $50,000 adjustments as soon as we officially run out of REOs (real-estate owned homes). And it doesn’t take long to do that.”
Nevin said he could not project when exactly the spike could occur, but said it is inevitable as the demand grows for a shrinking supply.
However, the large number of NODs could lead to an increased number of foreclosures within a few months. But San Diego State University professor of Real Estate Leonard Baron said he hopes banks will be able to modify loans of distressed homeowners.
“The banks are going to try not to force people into foreclosure, which, again, completely wastes everyone’s money,” he said.
