The end of the year is always the slow season for real estate sales and this year is no exception. The MLS only has 1,929 recorded sales for November, a drop of almost 400 from the prior month. The median sales price really took a beating though. The median sales price of all homes sold on the MLS fell a staggering $36,500 to $380,000. That is almost a 9% drop from October to November and 40% off the high of $642,000 from only 18 months ago.
Upper end properties are not moving and equity holding sellers are scarce. Of the November sales, 1,128 were distress sales. Those 1,128 properties were either bank owned, short sales or in some stages of foreclosure, 58% of all MLS sales. That’s an ugly statistic.
On the bright side, the price decline may be slowing. The median asking price of pending sales is $375,000. That’s the smallest price difference I’ve seen between pending sales and closed sales since I began tracking these numbers in the summer.
While the price slide appears to be slowing, there will be a new wave of foreclosures hitting the market after the first of the year. Fannie and Freddie both put moratoriums on foreclosures through December 31st and lenders are catching up with new notification requirements.
I’m sure there are lots of situations like the house next door to mine. It’s been sitting vacant for about eight months now and the bank didn’t bother to file a Notice of Default until September. No Notice of Trustee’s has been filed and they could have easily foreclosed and had possession by now. They must be very busy not to have moved on a $650,000 asset in a good neighborhood. It going to be a very slow recovery. If you’re looking to buy property, there’s no need to rush out and join the legions bidding up the REO prices, you won’t miss the bottom.
Brad Davidson
Lovin’ it! I mean, well.., you know what I mean.
I like everything about that information except your characterization of the distressed sales mix as an “ugly statistic”. I think that statistic is great: as that percentage rises, it means the market is flushing out naive buyers, and we’ll likely see more rapid price correction as a result. The faster, more pronounced, and more obvious the price correction is, the less feasible it will be for people and banks to sit on properties waiting for the market to “get back to normal”. Moreover, it should serve to emphasize how financially brainless the mortgage modifications largely are, as people re-default and banks suffer losses which were avoidable if they had moved quickly to foreclose and sell at market initially.
Then all we have to do to get housing to be affordable again is somehow convince the government to stop flushing money into the near-infinite black hole of sustaining bubble asset valuations and hurting responsible Americans. One problem at a time, though.
I think, no, I know the fact that over 1,000 people lost their homes in Orange County in November is an “Ugly Statistic”. That tens of thousands of people have lost their homes in 2008 is an “Ugly Statistic”. There is a human side to this housing crisis and it slaps me in the face every time I walk into a foreclosed house and see some children’s toys that were left behind.
I’m the owner of multiple properties and having my net worth decline by six figures is an “Ugly Statistic”. The thousands of people who put 20% down on properties in the last three years to only have it evaporate is an “Ugly Statistic”.
On the other hand, this is a wonderful opportunity for people who felt priced out to buy homes. I see more money making opportunities in 2009 than I have for years and my business is great. I’m a big believer in the theory that when one door closes another one opens but the human tragedy of all this is UGLY.
Brad
Should we call the wahhhambulance cause their parents were dumb?
Tragedies go on EVERY day.
Losing a home is not a tragedy, starvation and disease is a tragedy.
Let me see if I can state my position as unequivocally as possible:
There are very, very, very few people who bought a house they could afford (that is, 20% down with a fixed-rate loan and a monthly payment under 1/3 of their income), who had adequate rainy-day savings (6 months of income is the traditional standard, although I’d recommend more with a predictable recession being imminent for years), and have lost their job and their home. I feel bad for those people, if there are in fact any in that situation. I also feel bad for the children of the irresponsible individuals who lost their homes through gambling (the only other scenario), may they learn from their parents mistakes and not gamble their well-being on similar “get-rich-quick” schemes.
However, I do not feel bad for most of the people who have lost their “homes” (gambling bets) to this inevitable and predictable bubble correction. It’s grotesquely irresponsible and despicable to put your family in that situation, and I have very little sympathy, especially with the seemingly universal mindset of avoiding personal responsibility and blaming the “evil” lenders and “evil” corporations.
I also feel virtually no pity for people who own houses as investment or vacation properties. All investments carry risk, and bubble assets are very risky; if you were not aware of that, you have no business investing in them, and you were likely just trying to hop on the “get-rich-quick” bandwagon (not you Brad, but the generic investor). If you bought extra properties as luxury items, and they decline in value, suck it up. In either case, you may get my sympathy and condolences at a social gathering, but you absolutely fail to qualify as a human tragedy case.
If you put 20% down on a house in a massive bubble market and you’re now underwater, congratulations, you are now a more educated home buyer. Either you knew it was a bubble when you bought, or you were not educated enough to be buying (or you were gambling, which is the likely case, and I have no sympathy for you). If you believed everyone’s hype, your 20% down has bought you a valuable lesson: marketing (like NAR propaganda) is not the same as unbiased advice. Try not to get bamboozled next time.
There’s no human tragedy here, or at most an imperceptibly small amount. What there is here is unrepentant greed, recklessness, consequences, and harsh life-long lessons. Yes, some of those are ugly, but your statistic is the silver lining: it means were getting closer to the eventual bottom, where everyone involved can bottom out and start rebuilding, hopefully a little wiser this time. That’s not ugly, that’s the cycle of life.
Man, when the war breakout, some people lose their husbands, son, …. Some people lose their homes, jobs, but then there’re people who get raise, get promote because they win the battle. Some people make their fortune,…And the scavengers are full. This is life. Sorry, but something have to die before something grow. Just want this mess get over ASAP.
Brad (or anyone else with an answer), would it seem that the banks stall on foreclosure filings or fail to list REO’s so they don’t flood the market, and further dilute the values of the homes listed?
Over the past several months the banks have foreclosed on about 1,200 to 1,500 OC properties every month but only sold 800 to 1,000. Their inventory is obviously on the rise but I’m sure they realize it would only depress prices further if they released the inventory too quickly. The secret would be out and all the people bidding up these foreclosures would tone it down a bit.
Tell The World !! THERE”S PLENTY TO GO AROUND! STOP OVER BIDDING!
There, that should do it. My life would be so much better if my clients didn’t have to make offers on ten houses before they got one.
Brad
Any cristal ball on how much lower the housing market in Southern California will drop? another 10% 20% or 30%?
I notice that some parts of South Orange County (e.g. Irvine) have not dropped that much (20 to 25% or so). With the upcoming low interest rate (around 4.5%) and the government home owner bailout plan (loan modification, etc.), will we see the bottoming process taking shape in 2009? In fact, I start to notice recently the status of some of the houses on the market (which I kept an eye, and are bigger home ) have been changed from active to “backup offer”.
I beleive it’s another misleading tatic by Realtors regarding the “backup offer” situation ‘onthefence. I’ve noticed this more which makes me wonder if it is the strength of the buyer or some sellers not willing to come to terms. Example, my neighbor’s brother put a bid in on a property in our neighborhood on a private sale (non distressed) home at 98.25% of the asking price… nearly $10,000 less than the sellers list price. The seller is offended even though he’s probalby $100,000 over other comperables but appears to have accepted the offer and keep the home on the MLS as “backup offer” status. In speaking with my brother-in-law who has been in the appraising business for 20 years tells me, the seller will get a wake up call come time for the loan documents as the appraisal will fall short…. if the buyer doesn’t make up the LTV difference, then the sellers will then realize their demize. Prices will continue to fall further in the higher end areas but will take some time to break down what barriers remain.
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