Tuesday, December 16th, 2008 at 10:52 PM
More Bellowing
from sddt.com
With public opinion going sour on purchasing foreclosures, the housing market will hit bottom in 2009 and begin a slow resurgence in 2010, predict real estate Web site spokesmen from RealtyTrac.com and Trulia.com after releasing new survey data.
JtR: Buyers would have to love foreclosures for the market to bottom out, wouldn’t they?
Pete Flint, CEO and co-founder of Trulia.com, and Rick Sharga, senior vice president of RealtyTrac, spoke during a conference call with media Tuesday morning to reflect on this year’s wave of foreclosure activity across the country and how individuals are responding to it.
The two Web sites’ results from a recent survey show that 80 percent of U.S. adults feel there are negative aspects to purchasing a foreclosed property including fears of hidden costs and the property value decreasing after purchase.
“In terms of the concerns people have, I think they’re well founded,” Sharga said. “It is a little more complicated to buy a property particularly in foreclosure or in short sale than it is to buy a traditional piece of real estate.”
Only 47 percent of U.S. adults said they would buy a foreclosed home compared to 54 percent six months ago, according to the survey. “What’s significant about our findings is that just as the market is being flooded with more foreclosures, homebuyers are more hesitant to buy them. Misinformation around foreclosures abounds and that’s dangerous for the market and for homebuyers,” Flint said.
JtR: This statement is unfounded - misinformation abounds? What? Where? There’s no misinformation with REOs, the only difference is that you don’t get a disclosure statement from the sellers. Big deal, you shouldn’t trust the sellers’ disclosure anyway.
The result of the perceived risk is three out of four consumers think they should pay at least 25 percent less for a foreclosed home while 30 percent of those surveyed said they should get a 50 percent discount.
In San Diego, one in 244 homes is in foreclosure, according to RealtyTrac, and both Flint and Sharga said that number is likely to increase in 2009.
JtR: Foreclosures equal 0.4% of total? OK, I’ll live with that.
According to Credit Suisse (NYSE: CS), a wave of Alt-A loans is scheduled to reset in 2010. However, Sharga said some may reset as early as 2009. In a report Monday, Fitch Ratings downgraded Alt-A loans and Option ARMs in their Alt-A classification. It expects average cumulative losses of 2.72, 6.78 and 9.58 percent on vintage Alt-A transactions in 2005, 2006 and 2007, respectively.
As prices continue to slide downward, sales of attached and detached homes in San Diego have been up more than 100 percent as of October, according to statistics from the San Diego Association of Realtors.
However, the increase in sales could cause the market to flatten rather than improve due to an increased number of foreclosures from defaulting Alt-A loans flooding the inventory.
JtR: Huh? How can increased sales be a bad thing?
Sharga said government actions, foreclosure moratoriums and banks slowing down the foreclosure process have all likely led to a pent up supply of housing resulting in a “horrific” January.
Though Sharga and Flint’s outlooks were self-described as “gloomy,” Sharga said some areas around the country may have already bottomed out. “The market situation is going to be very, very much a local one there are parts of the country that have probably more or less bottomed out at this point because they didn’t have the explosive appreciation rates some years back,” he said. “I think the continuing falloff is going to be felt in those harder hit states (like California)… and the recovery there will be a little more problematic.”
Posted on Tuesday, December 16th, 2008 at 10:52 PM in Forecasts, Speaker Panel | 7 Comments » | 
Email
| 
Print
You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.
I’m not convinced that we will hit bottom in 2009. I have a feeling that the areas that were hit first and hardest might, but the ones that are lagging behind, the ones that were supposed to be “immune” are just starting to gain momentum and might keep rolling till 2011. Just a hunch.
ToadB | December 17th, 2008 at 12:06 amfrom foreclosure radar:
Despite the clear impact that State Senate Bill 1137 had on foreclosure activity in September and October, November saw significant activity increases across all stages of foreclosure.
From October to November, filings of Notices of Default increased 28 percent; Notices of Trustee Sales increased 10 percent and properties sold at auction increased by 14.8 percent.
Despite these significant gains, foreclosure activity is still well below the peak activity level reached before SB 1137 took effect. The holidays are likely helping to slow the return to those levels.
It is not unusual to see double-digit increases in properties sold at auction in January, after the November and December holidays. From December 2007 to January 2008, properties sold at auction increased 55 percent.
Compounding the likely increases after the holidays is the fact that the number of properties currently scheduled for auction is near the peak levels reached in July 2008, while foreclosure sales are 44 percent lower.
Jim the Realtor | December 17th, 2008 at 5:13 amI think there may not be a “the bottom,” or even a “the market” anymore, and we may see things divided into tiny “micromarkets.” . We will eventually see some of today’s worst-hit areas bottom and start to creep up again while crashes in the so-called “immune” areas of the county that are still yet to go into reset are just getting underway.
Increased sales can be “a bad thing” if one lives in an essentially built-out location where there are normally few listings. The ideal for a current homeowner (but certainly not for realtors) is very few sales and even fewer listings in your neighborhood because everyone wants to move there but nobody who is already there particularly needs to or wants to sell.
GeneK | December 17th, 2008 at 8:00 amwhat qualifies two web geeks to make predictions on our local housing market. More misinformation from mis-precieved “experts.” If you want to know what is going on in your local RE market, ask a local Realtor.
Big Wave Dave | December 17th, 2008 at 1:43 pmThanks Big Wave, I agree.
They get in front of a microphone and blather about, saying things that will stir the pot. They sound like the amateur real estate experts that they are.
Jim the Realtor | December 17th, 2008 at 2:22 pmBWD and JTR,
No offense. I would not say “ask a realtor”. Much good that would have done you in 2004, 2005, 2006, or 2007. 2008 for that matter is a complete write off for Socal “bottom-callers” realtors.
Let’s be fair here. This is a caveat emptor problem, not “ask a professional”. Get as much information as you can, and then make a decision. Be prepared that you will make wrong decisions about as often as that “professional”, or perhaps even less if your motivations are not aligned (he wants a commission, you want a good deal). Realtors often cannot see longer than an escrow, while web geeks are prone to data analysis judgement and bias errors. Some people are just blowing sunshine.
I can state pretty confidently that if they did not see the bubble coming, they are unlikely to see the end of it. And, just because they saw it coming does not qualify them to say when it will end. There are very, very, very few people in the entire world who know or can accurately predict what will happen next year. Anyone who believes “ask a realtor” is a sheep waiting to be fleeced.
Do
Your
Own
Due
Diligence
Chuck Ponzi | December 17th, 2008 at 3:59 pmKool aid alert for San Diego County!
Coconutz! | December 21st, 2008 at 7:49 pmCoconutz!