The Orange County Register today reported that the median sales price for March 2009 was $385,000, a $15,000 “jump” from the January low of $370,000. The writers postulate that after two consecutive months of price gains that, “Orange County’s housing market may have bottomed out”. They back this up with a quote from DataQuick, “In the world of likelihoods, I think we have seen the price bottom”.
It’s the spring buying season. Demand, and therefore prices (usually), goes up. This trend has been exacerbated this year by the shortage in foreclosure properties. Fannie, Freddie and most of the major lenders suspended foreclosures earlier this year and as of today there are only 551 REO properties on the market out of the 10,418 active listings in Orange County. Most buyers want a foreclosure property and shortage has created bidding wars. It’s not at all uncommon to see ten or more offers on REO listings and prices are being bid up well over the asking price.
Does this signal a bottom? Not likely. All it’s done is created a back log of foreclosures. While the foreclosure moratorium was announced with great fanfare it’s gone quietly un-noticed that the major lenders have started up the foreclosure machine again. March NOT’s (Notice of Trustee Sale) in California were up 80% to 33,178 in March over February. Those numbers will probably continue to rise as the system starts to catch up from the moratorium and new notification laws. These new properties will hit the market come May and June and there should be a constant supply for the foreseeable future. It’s estimated that 40% of homeowners who are underwater abandon their homes so bailouts aren’t going to stem the tide.
As of today the median list price of the pending sales on the MLS is $375,000. That shows me some stability for a few months but when demand slows down at the end of summer, the banks will lower prices to keep buyers stepping up to the plate.
Brad Davidson
