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This week’s REO list is out, and it’s a whopper.

It is a culmination of the last few weeks of trustee sale activity, and because we’ve seen that the recording of the deeds has been delayed in many cases, it could be that a bulk of them finally hit.

The recent REO list for the county has ranged from 20-50 pages, with five properties per page.

This week’s list?  139 pages!

Click on ‘San Diego County REOs’ in right column  >>>>>>>>>>>>>

Talk all you want about consumer sentiment and buyer psychology, those are hard to measure. 

Let’s look at the facts, and specifically focus on what has happened since the the mortgage meltdown in August, and the results here in the first month of 2008.

Where is the higher-end market in 2008?

Let’s start in 92067.  "The Ranch", Rancho Santa Fe, regularly ranks in the top five exclusive neighborhoods in America.  If you want to be in the heart of the Ranch, the Covenant, and spend $3,000,000, you’ll get an older house that needs work on a couple of acres, but in the outlying areas that’ll get you a newer estate on an acre or so.

Here are the current stats for detached listings above $3,000,000:

115 active listings, list prices averaging $830/sf.

21 closed since 9/1/07, averaging $574/sf.

3 closed since 1/1/08

3 have gone pending since 1/1/08

Rancho Santa Fe continues to defy gravity, as markets go, and sales keep happening.  The average ‘days on market’ for these 115 active listings is 149, and that’s not counting the relists, so it’s probably closer to 200.

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The 92024 zip code is the City of Encinitas, just north of RSF, and consists of coastal properties, tract homes, and a number of ranches in Olivehain.

Here are the current stats for detached listings above $2,000,000:

36 active listings, list prices averaging $629/sf,  157 DOM

10 closed since 9/1/07, averaging $651/sf.  95 DOM

3 closed since 1/1/08

2 have gone pending since 1/1/08

When you only have 10 pieces of data in a sample, the averages can be skewed somewhat.  If you look at the solds since 1/1/07, they average $601 per square foot, and 80 days on market.  (We should add 50% to these days-on-market stats to account for relists.)

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The 92130 zip code is commonly referred to as Carmel Valley, and is official a City of San Diego address.  The real estate values benefit from top-rated schools and proximity to downtown and other employment centers.  It is known for its tracts, but there are a number of large estates in the outlying areas.

Here are the current stats for detached listings above $1,500,000:

45 active listings, averaging $521/sf, 102 DOM

18 closed since 9/1/07, averaging $486/sf, 65 DOM

2 closed since 1/1/08

0 gone pending since 1/1/08

Oh-oh, none have sold so far this year, and 45 are waiting. The 102 average days on market is more like 160 counting relists, and the gap between average asking price-per-sf and sold-per-sf isn’t that far apart. 

Will there be adjustments made by the sellers and their agents?  Or can they hold out like they do in the Ranch?

Carmel Valley is approximately 20 square miles, and has an estimated 2005 population of 27,839.  The average adjusted gross income in 2004 was $131,876 – is that enough to keep it all afloat, or will sellers be forced to lower their prices substantially to effect a sale?

The buyers are waiting, judging by the goose-egg for 2008.

For more statistics on 92130, here’s a link to city-data:

http://www.tinyurl.com/36pzk3

CV is the area east of the I-5 freeway, south of RSF (orange area)

Love him or hate him, Jim Cramer has a national audience. 

In a business where perceptions can be more important than reality, you wonder if a guy like Cramer could sway public sentiment enough to make a difference?

from cnbc.com:

Time to Buy a House?

We have followed the relationship between the active and pending listings because it’s a good reflection of the “health’ of the marketplace.

This chart, in alphabetical order, compares today’s counts to those from June 30th – note that the supply (actives) have fallen in every area, but the demand (pendings) has fallen further. While June might seem like “the selling season”, I’m not factoring in any seasonality, #1 – this is San Diego, #2 – the holidays seem like a long time ago, #3 – if you need to sell, seasons don’t matter. (Plus I don’t have the individual area numbers from last January):

For easier viewing of the trend, here are the same counts, but dividing the actives by pendings, ranked in order of best-to-worst, currently:

Looks like some ’slinky’ effect here, Oceanside hasn’t deteriorated much, but the higher end areas have – though 92067 continues to be its own world.

With Carmel Valley’s pendings almost half of what they were in June, Encinitas might be the new golden child, but both are in the 4s. Here are other areas around the county:

Pendings on all charts are those that entered escrow after October 1st.

Those of you who follow the defaults in Carlsbad saw an old friend come back on the list last week – 3745 Adams.  The ‘house’ was hand-built of adobe bricks by the owner back in the 1950s, and looks it – there are parts that have no floor.

Bit it’s on nearly an acre of land, and though it is close to the freeway, it is still valuable – especially to my church next door, who has been hoping to expand.

I tracked down the owner’s daughter the last time they  hit the NOD list, and luckily she remembered that our kids were in the same class a few years back.  I expressed my willingness to help her with the situation – but she felt she had it all handled.  She still wanted to "develop the property".

She got into a bind the first time around because she had taken out a $640,000 loan, and had trouble making the payments (She doesn’t work, her husband is a truck driver, and mom is in the rest home in Washington).  So she took out a small second with a hard-money lender, who, according to her, promised to advance more funds to help develop the property.  Apparently he mis-understood, and instead tried to foreclose on her.

I offered her $1,000,000 for the property, on behalf of a coalition of parishioners who would turn it over to the church once the expansion plans were in place.  She refused to consider it, insisting that she would endure this hardship and carry on with her deceased father’s plans to build it out.

Knowing that she was into more than she could handle, and thinking she might reconsider, I helped her with the paperwork to escape the foreclosure.  Literally the day before she was about to lose the property, she got a court injunction to stop the trustee sale, due to ‘elder abuse’.

The lender rescinded his foreclosure proceedings, after an attorney threatened to sue him.   The most unbelievable part of the whole story was that the lender then cancelled his second note and trust deed, and let her walk with around $40,000.

I offered my deal again, but she refused, because she had another lender willing to give her $90,000 – enough to make payments on the first, plus some walking-around money.  That hard-money lender insisted though that she sign over the grant deed – which she did, under the agreement that she could buy back the property in six months.  Why she thought that deal was better than our million dollars is beyond me.

But somehow she pulled it off, and in October the property reverted back to Mom.

Yesterday I got this email from her:

Just Seven months ago a group of volunteers formed the Kokopelli Board of Directors and gave birth to a wonderful non-profit community benefit project. The Kokopelli Community Workshop project, was created to open a educational workshop and educational Center in Carlsbad California.

A large adobe complex, located on a acre of land on Adams Street in Old Carlsbad was donated the project, by 84-year old longtime Carlsbad homeowner, Betty Bryan, (Betty is guaranteed lifetime occupancy by the project, in private rooms located adjacent to the main building)

The original eight kokopelli board members included; two college teachers, (one teaches copy writing and one teaches finance) an attorney, and her legal assistant, an editor, a journalist, (that’s me) a computer design expert, and a well known holistic health professional, who works successfully with cancer patients.

We also been busily involved planning fundraisers, collecting books for our library and meditation center. We have all contributed many nights and week-ends, to remodeling the large adobe structure located on an acre of land located adjacent to St.Patrick’s Church in Carlsbad.

Over the last months we have accomplished the following; we have landscaped the grounds and rented a back-hoe and replaced the leach-lines, which run directly under our planned community aquaponic organic farm project located directly behind the adobe structure.

THE CURRENT CRISES ;
Last July an investor from Oceanside, a man named Mr. Rick Ardissoni was introduced to us as someone who was interested in helping the Kokopelli Community Workshop Project.  He was introduced to our project as an investor who could potentially advance the needed funds for our project to keep rolling, if he could be repaid at the end of January 2008 when our project funding would begin to become available.

Mr. Ardissoni joined our board of Directors, attended our meetings and seemed to show benevolent interest in our project.  So we convened a special meeting our our finance committee and voted to execute a $600,000 "line of credit" trust deed to be recorded against Betty Bryan’s property, naming Mr. Rock Ardissoni as beneficiary.

On October 10, 2007 the trust deed was recorded at the San Diego County recorders office securing Mr. Ardissoni’s interests to enable our "line of credit. "   We were led to believe that this security would enable Mr. Ardissoni to provide sufficient funds to keep our project rolling. In this way we hoped to keep the headquarter’s mortgage paid and be able to continue our remodeling work until our grant money could begin to benefit the kokopelli project at the end of January 2008.

At the end of November 2007, after Mr. Ardissoni had advanced the project a grand total $34,000, when he suddenly refused to attend board meetings and apparently lost all interest in the Kokopelli project.

Mr. Ardissoni also refused to advance us any further funds.

Alarmed we scrambled to find another investor, because our financial director warned us that the property must be maintained in good standing, in order qualify any potential grants.   Finally we were thrilled to locate a benefactor who was willing to step into Mr. Ardissoni’s position.

Early in December, the alternative investor, a genuine benefactor, offered us $100,000 in private money so that we might repay Mr. Ardissoni $ 44,000 from a new loan. (This amount included $10,000 interest on the original investment of $34,000)

Kokopelli project planned to use the balance of the new loan funds to reinstate our mortgage, and then make timely mortgage payments until our grant funding and other fundraising projects could make additional funds available.

Mr Ardisoni’s existing $600,000 trust deed would need to be re-conveyed as a funding condition. Then a new trust deed for a lower amount ($120,000) could be issued to the new investor , which would allow Mr.Ardissoini to be reimbursed $44,000 from the closing the new loan escrow.

When Mr. Ardissoni was informed that he could be immediately repaid, much to our dismay, he let us know that he was not interested in being repaid only $44,000, and also that all further communication must be to his attorney ( Mr. James Maynard, of Carlsbad.)  Attorney James Maynard contacted us only once to communicate that his client was "not inclined’ to re-convey the $600,000 trust deed. Now attorney James Maynard does not seem to answer his office phone or bother to return our calls.  

As of January 2008, Betty Bryan’s home and property was put into foreclosure status.

Mr. Ardissoni’s refusal to re-convey our equity has now additionally prevented Betty Bryan from qualifying for a federally guaranteed FHA refinance loan, that would have resulted in a much lower more affordable mortgage payment.

Betty Bryan qualified for this special FHA govenment program as one of approximately 2.2 million homeowners who borrowed against their homes between 1998 and 2006 and most have a subprime mortgage.  Many of these borrowers now face the loss of their homes to foreclosure. Earlier this year, 80% of subprime home loans which had fixed rates initially, became adjustable. That is, the interest rates jumped higher on either the 25 month or the 37th month. This jump in the monthly payment caused "payment shock" for the affected homeowners. Many of the loan payments increased by about 40%. Unable to make these new higher payments, these homeowners face foreclosure.

As of January 2008 Betty Bryan’s home and property is recorded as being in foreclosure, and due to the stolen equity this 84-year old, 50 year resident of Carlsbad no longer qualifies for a loan, and may soon be made homeless.

We have tried to explain to Mr. Ardissoni that if he allows the property to go into a mortgage default Kokopelli project would not qualify for any of the grants everyone worked so hard to submit. In response, Mr. Ardissoni said he would just have to protect his interests and referred us to an attorney James Maynard who does not return any of our calls.

Kokopelli Community Workshop project has now retained the service of an attorney, who is a specialist in fighting predatory lending.   We are very fortunate that Mr.Fransen has taken our case on contingency,  BUT…… unless we can pay the court costs and get the property out of default, senior Betty Bryan stands to become homeless in a couple of months, and a valuable community project; Kokopelli Community Workshop will to be lost to these loan predator’s tricks.

SO PLEASE HELP US SAVE BETTY BRYAN’S HOME AND OUR COMMUNITY WORKSHOP PROJECT!

We want you to know that any help you can give will make a huge difference. Please make Betty a donation, even if all you can only spare a dollar or two. If everyone who reads this email sends Betty just $5.00 we will be able to save her home.

please send to all donations by mail to;
Betty Bryan
PO box 1410
Carlsbad Ca 92018

In any case thanks for reading all about this crises!

We must create community awareness of these predatory tactics to often used to steal peoples homes and real estate.  Kokopelli Community Workshop will also implement a special foreclosure workshop to help individuals and families whose homes are in foreclosure or who have mortgage loans about to enter an adjustable rate understand their options; including but not limited to all government programs, bankruptcy options, short sale opportunities, legal stays against foreclosure, and to help those in need to thoroughly review understand and review the financial and legal consequences of all potential loans or other creative financing schemes that may have under consideration, in a protected and legally sanctioned environment.

Also remember to keep a copy of your donation as it is tax deduct-able.

From Inman News:

A proposal to increase the $417,000 conforming loan limit faces an uncertain fate in the Senate, where an influential Republican is questioning the wisdom of allowing Fannie Mae and Freddie Mac to buy up or guarantee what are now considered jumbo loans.

House leaders and the Bush administration tentatively agreed last week to boost the conforming loan limit and to raise caps on FHA loan guarantee programs as part of a $150 billion economic stimulus package.

It’s still unclear exactly how much the conforming loan limit was to increase under the agreement. House Republican Leader John Boehner of Ohio’s office said the agreement was to raise the conforming loan limit to $625,000, while House Speaker Nancy Pelosi said Fannie and Freddie would be allowed to purchase mortgages of up to $729,750 in high-cost areas.

Both Boehner and Pelosi issued statements saying the agreement between House leaders and the Bush administration called for Federal Housing Administration (FHA) loan guarantee programs to be expanded to cover loans of up to $725,000, up from $362,000 now.

The increase in the conforming loan limit would be temporary, expiring after one year, while the increase in FHA limits is envisioned as permanent.

But an increase in the conforming loan limit faces opposition in the Senate, where Sen. Richard Shelby, R-Ala., is sticking with the position previously held by the Bush administration: that any increase in the conforming loan limit should be tied to strengthening oversight of Fannie and Freddie ("the GSEs," or government-sponsored entities).

The House passed a GSE reform bill in May, HR 1427, that would create an independent agency to oversee Fannie and Freddie. But passage of similar legislation in the Senate has been stymied in years past by disagreement over the separate but related issue of growth limits on Fannie’s and Freddie’s loan portfolios.

A spokesman for Shelby, the ranking Republican on the Senate Banking Committee, said he "believes that consideration of raising the conforming loan limit should be done carefully within the context of broader and meaningful GSE reform."

In Shelby’s judgment, "doing so in the absence of such a process enables thinly capitalized entities with recent accounting problems to provide a high-risk benefit to the wealthiest Americans without any real consideration of the need to do so, or of the risks it presents to the taxpayer," a spokesman for the senator, Jonathan Graffeo, told Inman News in an e-mail.

The National Association of Realtors has estimated that raising the conforming loan limit to $625,000 would prevent 140,000 to 210,000 foreclosures and prop up home prices by 2 to 3 percentage points. But critics say increasing the limit could hurt Fannie and Freddie’s mission of helping low- and moderate-income families and put them at greater financial risk.

Sen. Chris Dodd, the Connecticut Democrat who chairs the Senate Banking Committee, has promised to support passage of GSE reform legislation this year — a prime consideration in the Bush administration’s decision to get on board with a temporary increase in the conforming loan limit, Treasury Secretary Henry Paulson said Thursday.

But Dodd is also pushing for more foreclosure relief programs in the economic stimulus package, including the creation of a Federal Homeownership Preservation Corp. that would be provided with $20 billion in funding to purchase mortgages from lenders, allowing homeowners to refinance into government-backed, fixed-rate mortgages.

President Bush in his State of the Union address tonight is expected to warn the Senate not to push for additional programs in the stimulus package, such as tax rebates for Social Security recipients and an extension of unemployment benefits, the Associated Press reported.

"I don’t think the Senate is going to want to derail this program," AP quoted Paulson as saying in a CNN appearance Sunday. "And I don’t think the American people are going to be anything but impatient if we don’t enact this bipartisan agreement quickly."

It’s unclear, however, whether Shelby or other Republicans who object to some provisions of the stimulus bill that’s eventually put forward by Senate Democrats will have the opportunity to make amendments.

The House was scheduled to vote on an economic stimulus plan Tuesday, and Senate Majority Leader Harry Reid has set a Feb. 15 timetable for putting a bill on President Bush’s desk.

Today’s headline:

New single-family home sales fell 4.7 percent in December to its lowest rate in nearly 13 years.

I don’t know about you, but that sounded pretty good to me.

San Diego County’s detached resales for December:

2005 = 1,760

2006 = 1,607

2007 = 976

A much-bigger drop this time, -39% YOY, than the previous year. 

How about 2008?

January 1-22

2006 = 801

2007 = 724

2008 = 504

Only a 30% decline, year-over-year, for the preliminary January sales, but a similar pattern.  The previous YOY declines in both categories were -9% and -10%, and those seemed substantial then, now a -30% seems normal and expected.

Once the late-reporters finish logging their sales this month, the total might go up to 550 or so for the time period January 1-22, but that would still be a 24% drop, YOY.

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Could the slight improvement in the amount of decline be a sign of something?  We can check the pending file to see what’s coming over the next 30-60 days.  I don’t like considering the pendings that have been in escrow for more than 3 months, even though they might still close. 

Here are the pendings, in the month they went pending:

October and before = 212

November = 165

December = 472

January = 1,020

The last three numbers add up to 1,657.

There aren’t enough pendings to get giddy about there being more closings over the next few months, but we might slog along at about the same monthly pace that we’ve been at recently.

There have been 603 closings for January reported month-to-date.  Last year there were 474 closings between Jan 22-31, so if we take 70% of those, we can project about 934 closings for this month, and if we add a few late-reporters, it’s roughly the same as the last three months:

Oct = 937

Nov = 1,020

Dec = 976

4Q07 = 2,933

There were 4,504 sales in 4Q06, so we’re looking at a 35% decline, year-over-year, on the quarterly numbers too.

Monthly sales will probably be around 900-1,000 for the next two months.  There are currently 12,267 active listings of detached homes.

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Which brings us to the US Open tickets contest for 4Q07.

Here are the closest guessers:

We’ll take the final count on Friday, but it looks like Smithers is in the driver’s seat.  Here is the report from the Buick Open, to give you a preview – from OCVulture:

The weather was good.
The golf was great!
Tiger was unreal
Phil still needs to loose weight.
The $10 martini’s at the Grey Goose Glass Lounge on the 17th fairway was unigue — but hey we got free golf caps!…Its pretty sureal to see Tiger on the fairway, and also seeing it live on the huge plazma screen drinking a martini and explaining to a Grey Goose hostess why golf is so difficult?! 
Anyway, we spent most of the time watching approach shots into the 4th green (right by the cliffs) and watching some amazing long down hill puts back to hole.  FYI..Great spectator spot to see a variety of shots around the green with amazing views of La Jolla.
Told my buddies about Klinge Realty and the Blog!
THANKS AGAIN!!!!

On the same front page of the North County Times, a story about the McMansions being built in Carlsbad.  Note that the Carlsbad general plan is being revised – at the end of the article:

That’s because Carlsbad is about to embark on a multiyear effort to overhaul its general plan — the master building document that details everything from where roads will run to how to handle "in-fill" projects, or new construction in older neighborhoods such as Old Carlsbad.

http://www.nctimes.com/articles/2008/01/27/news/coastal/3_01_991_26_08.txt

Here’s a link to the story regarding the REDC auction yesterday.  It sounds like it went as expected, a few deals mixed in with mostly close-to-retail sales:

http://www.nctimes.com/articles/2008/01/27/news/top_stories/1_02_991_26_08.txt

"This is just information and entertainment," Komisars said. "There’s a Jerry Springer feel to the whole thing."

(photo from a corner in Fire Mountain, Oceanside)

The North County Times today has a front-page article on the foreclosure mess in 92057:

http://www.nctimes.com/articles/2008/01/27/news/top_stories/1_01_991_26_08.txt

David Streitfeld (reporter from the New York Times) and I have been talking this week, and our 3-4 conversations got me a mention in today’s edition:

http://www.nytimes.com/2008/01/26/business/yourmoney/26mortgage.html?_r=1&pagewanted=1&ref=business&oref=slogin

What has been needed all along was for the sellers to get their price right - plenty of people want to buy a house, they just can’t/don’t want to pay crazy prices.

People will wonder from David’s article if the buyers are coming around – but it’s really that some sellers are finally getting more realistic about pricing.

Rob Dawg said it here on November 9th, that the market has reached its inflection point (n.   A moment of dramatic change, especially in the development of a company, industry, or market).  Sellers have been holding out, but are noticing that the buyers are winning the fight.  However, when buyers find a deal, they are stepping up and buying.

I mentioned to David that I had just run across a property that had 14 offers on it, and he was shocked, and asked, "How many years has it been since you saw that happened?"  My response?  "That’s the third time in the last month."

It’s still tough to find them, but sellers are capitulating – finally. 

Here are three recent examples – note the different types of sellers:

173 Village Run E., Enc

4 br/2 ba, 1,266 sf

OLP = $589,000

SP = $460,000

COE  1/18/08  DOM 138

This is the first Encinitas house to sell under $500,000 in four years.  The owner was elderly (noted in MLS) and it looks like she had been there since it was built in 1971 – the tax assessment was $56,868.  Though they started at $589,000 (OLP = original list price), it’s likely that the $460,000 sounded better than not selling.  The listing agent was a mortgage company who included one picture – it pays to look a little harder at the ones with few photos or lousy comments.

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944 Jasmine

3 br/2 ba  1,766sf

OLP = $839,000

SP = $620,000

COE  1/16/08  DOM 121

I’ll just flat out say it – when you have a house in original condition, a bank like Countrywide making the decision on a short sale, and a listing agent with a lousy reputation, this is what you get – a giveaway price.  Countrywide had two loans totaling $720,000, and it seems like they have the green light to eat $100,000 without a fight on all deals.  The buyer was smart – they had to wait alomost 60 days to close, but they lowballed at a price that made it worth it for them to be patient, and they got it.

You’ll hear agents complaining about short sales and not wanting to show them because of the hassle, but that’s why they are a gold mine. If you have the patience, make lowball offers and be willing to sit for 60-90 days.  There is no obligation unless the lender accepts your offer as written, which is unlikely – they will at least insist on adding their own fancy terms and disclaimers, which you aren’t obligated to accept unless you like the rest of the deal.

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5778 Mosswood, CV

5 br/3 ba  2,507 sf

OLP = $995,000

SP = $850,000

COE 1/18/08  DOM 69

This Torrey Hills neighborhood is tucked away at the end of Carmel Mountain Road.  There were three sales in July and August within a block of Mosswood; $925,000, $1,005,000, and $1,030,000.  Yet the original owners didn’t hold out for a million dollars - they didn’t have to, their loan was in the $300,000s.

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The sellers are more willing to deal – but you still have to find the right house, at the right price – keep looking!