From sddt.com
The number of notices of default and trustee deeds filed in San Diego County in September fell for the third consecutive month.Ā
The county assessor recorded a 4-percent drop in notices of default (NODs) from August.Ā The 2,795 NODs filed were the fewest in a single month since November 2008. However, the figure is still more than double the total filed in September 2008.
The number of trustee deeds was down more significantly with a 15-percent month-to-month decline. While 1,156 trustee deeds is a high one-month total from a historical standpoint, it is 41 percent lower than the number recorded in September 2008.
(The MLS is showing 2,690 closings at $232/sf last month for all residential properties.Ā In September, 2008 there were 3,004 closings, at $248/sf.)
Half empty or half full?
http://www.realtor.org/press_room/news_releases/2009/10/streak_continues
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said first-time buyers need to act now. āPotential first-time buyers must make a contract offer very soon to have a reasonable chance of qualifying for the tax credit,ā he said. āCongress needs to extend and expand this program because itās stimulating the economy and reducing inventory close to price stabilization points.ā
***
āWe know there is a pent-up demand because sales are below normal levels for the size of our population. The faster we absorb excess inventory, the sooner weāll turn the corner on home prices, prevent additional families from becoming upside-down in their mortgages, and give Wall Street the confidence to extend credit to other sectors,ā he said.
***
Yun said the forecast for home sales and prices depends very much on whether a tax credit is extended. āAll we can say for certain is sales will decline when the tax credit expires because we are not yet on a self-sustaining recovery path. It also raises a risk of a double-dip recession,ā he said.
2030?!?!?
This is from a couple weeks ago, but I’m not sure if it was brought up here…
http://www.marketwatch.com/story/home-prices-wont-regain-peak-this-decade-moodys-2009-09-18
Moody’s Investors Service threw cold water on optimistic projections of a V-shaped recovery in the battered U.S. housing market, predicting it could take more than 10 years to get back to boom-level prices.
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“The scars that this downturn will leave on the economy and the housing market will be long lasting and persist in nearly all facets of the housing industry, including the demand for homes, ownership patterns, homebuilding, and house price appreciation,” the analysts forecast.
“It will take more than a decade for many measures of housing activity to regain ground that has been lost as a result of the correction: The intense downturn will overcorrect for the excesses in the housing market generated by the boom years,” they added.
****
Yet Moody’s predicted home prices “will remain at a persistently lower level than we anticipated prior to the crisis, and it will take a full decade from the 2010 bottom just for the [Case-Shiller] national index to climb back to its 2006 peak.”
On a regional basis, Moody’s said hard-hit states such as Florida and California will be among the last to recover and “will only regain their pre-bust peak in the early 2030s, well after the nation does.”
****
“In general, the length of the downturn and the length of recovery in a region will depend on the degree of aggressive lending or overinvestment in housing that occurred during the boom,” said Celia Chen, senior director of housing economics at Moody’s Economy.com.
Does anyone really believe the foreclosure numbers?
Well one has to ask in SD cty what percentage of loans where subprime vs pick a pay option arm,teaser rate ,and any other concoction the Angelo Mozillos of the world dreamt up to keep the party going. My guess is there is a ticking time bomb ready to explode on the upper end,the starter market has bottomed and is improving.
I’m glad you asked.
The same title company that is always quoted with the worst foreclosure news confirmed that in Encinitas, Rancho Santa Fe, and Carmel Valley the percentage of option-ARMs and neg-ams mortgages in effect were 5.5% of those mortgaged, and they manually read every trust deed recorded.
And Ronald, that’s the same Moody’s that is predicting a 25% INCREASE in San Diego values over the next five years, right?
http://realestate.yahoo.com/promo/where-home-prices-are-hitting-bottom.html
Hmm, I’ve seen half off of peak prices at the trustee sale in rancho santa fe. The important thing is how underwater the borrower is. That is the best indicator of default.
This falls under the assumption that all lenders are filing a NOD if the payments are not received.
Jim, am I reading that right that 92130,92024 and 92067 only have 5.5% of all mortgages as option arms or neg ams?
JimG nailed it..
JimG
You are reading that correctly.
I verified it repeatedly with them too. I also asked, how come you guys report all the negative news you can find, but never release data like this? They had no answer.
Yes, there are plenty of delinquents who haven’t received their NOD yet, those will be next year’s foreclosures, just like those this month were the undisclosed deadbeats from their era.
2008 = 19,575 trustee deeds
2009 = 11,450 YTD (9 mo)
The highest month ever was July, 2008, when there were 2,285 trustee deeds.
Currently there are 20,530 San Diego County properties in default (NOD & NOT) on foreclosureradar, many of which are loan mod candidates. But let’s say every one of them gets foreclosed over the next 5 months = 4,106 per month.
Everywhere I go there are 10 offers on every good listing today.
But let’s say there are two buyers for every listing. September, ’09 MLS sales at 3,000 x 2 = 6,000 monthly sales capacity.
If REO listings doubled, I think there are enough buyers to handle them at near-today’s values. It’s just a matter of price – we’ll sell every REO for something, and the vast majority of them will probably be dogs and deserve a discount.
But there wasn’t one REO sold in CV last month, what will be the max, 5 per? 10 per? There are 30-40 monthly CV sales currently, and if there were 5-10 extra REOs, wouldn’t they be absorbed?
Other areas can calibrate accordingly.
5.5% isn’t surprising for those zips. I’d be surprised if we were talking Oceanside or Mira Mesa though. Option arm and neg-am favors people whose only form of fiscal discipline is knowing their monthly payment and live month to month.
It’s like talking two different languages – when talking about buying a car I’m quoting the dollar amount and they’re quoting the monthly payment (without even any mention of the length of term!).
That said I do know a few people who bought in CV using option-ARM, and they’re all young, bought as much as they could afford, and bought on speculation. Difference is, they’re definitely the exception. Oh, and they paid as much as I did for my home except they make half as much as me. Wow.
Jim,
Thanks for the video on SEH. Felt like you were talking directly to me. Also, thanks for answering my question.
Adam
What’s the difference on the the number of NOD’s?
Lenders have to actually Foreclose before properties hit the open market.
“On a regional basis, Moodyās said hard-hit states such as Florida and California will be among the last to recover and āwill only regain their pre-bust peak in the early 2030s, well after the nation does.ā”
The one thing I will say about this is that Socal’s population is still growing and believe it or not still faces a housing shortage,
Anyway maybe 2017 or so would be a little more realistic for pre-bust peak prices.
5.5% is still a scary number due to the strategic defaulters. All it takes is one or two that go down hard and get resold by “creative” realtors without every hitting the MLS and the comps for the neighborhood reset lower. The lower those comps go, the more strategic defaults by homeowners who CAN pay but are making a business decision not to. That 5.5% can trigger a much larger wave of defaults and destroy neighborhoods.
I wonder how concentrated that 5.5% is. For example, if you took Pacific Highlands Ranch I suspect the number would be quite a bit higher.
Agreed – there will be streets around town where 28 out of 29 houses are at risk, and others that don’t have one. Very indiscriminate.
The strategic defaulters are the wild cards, and they should surprise everyone.
What percentage were Alt-A?
Thanks for your informative hard work!
“Does anyone really believe the foreclosure numbers?”
Only when they are going up. When they are going down, we assume they are flawed or otherwise untrustworthy.
JtR,
I guess we could see both +25% in 5 years and return to bubble peak in 20 years.
Example:
$1,000,000 at Bubble Peak
$500,000 (at bottom)
$625,000 (+25% in 5 years)
$1,000,000 (+60% over another 15 years)
What’s that, about a 4-5% increase per year? Will that keep up with inflation? Is that about “normal”?
So, my mantra is to either buy at half off peak or plan on holding for the next 20 years. Personally, I’d prefer a little more flexibility than being tied to a home for 20 years.
āCongress needs to extend and expand this program because itās stimulating the economy and reducing inventory close to price stabilization points.ā
The NAR President Charles McMillan, is a joke he says we need to extend the tax credit to stimulate the economy. I do not see how in the world this tax credit is stimulating the economy.
The jobs number this morning along with all of the economic data this week has been below consensus. Worse yet we continue to lose a quarter million jobs each month. The economy does not look like it’s improving that much so why extend this tax credit.
We now hear calls for a 2nd stimulus from congress and they keep talking about extending this home buyers tax credit. Spending all this money is not leading us to a sustained economic prosperty.
How in the world are we going to turn this economy around by wasting more money each passing month?
Another round of cash for clunkers should do the trick!!!NOT!!!!
“Personally, Iād prefer a little more flexibility than being tied to a home for 20 years.”
The last few nights I have been re-reading the book The Millionaire Next Door. One of the tidbits that the above statement brought to mind was of the millionaires the authors surveyed, they had lived in the same home an average of 18 years.
The transaction cost for real estate is huge in absolute terms, but usually neatly hidden away in the mortgage. Buying a new home every 3-5 years can seriously erode your total return.
The Millionaire Next Door was published in 1998, but with its emphasis on how hyperconsumerism prevents people from accumulating wealth, you’d think it was just released last week.
Wow 5.5% thats it. Un freaking believable.
I remember back to a year/year and a half ago. Mr. Mortgage and other similar huckster types had us believing that ALL the coastal CA areas were absolutely infected with poisonous loans that would cause a tsunami in defaults and drive prices into oblivion.
He peddled his doom message in apocalyptic terms, and those of us hoping to see it happen lapped it up, relying on every last word of his. Then our friend JTR smacks us back to reality with a 5.5% number.
Sorry folks, but its a “critical mass” issue. Given the 25-30-35% or more junk loans we saw in areas like temecula, no wonder they came down in spectacular fashion. But 5.5% causing a meltdown? No chance.
I hold out hope for price reductions via job loss and simple attrition – this thing aint over juuust yet. However, I will no longer be waited for baited breath for a junk loan tsunami that Mr. Mortgage assured us was just around the corner.
I am humbled by just how many bubble sitters there have been out there! for every knucklehead flipper and realtor that bought multiple properties, there are just as many clear headed bubblesitter that waited this thing out.
we look at the huge amount of transactions that took place back in the bubble years and figure, “my goodness, everyone that were suppose to buy did, therefore there would be no buyers out there.” completely wrong. over the last few months I have met quite a number of professionals, dual income professionals, that stayed in 1000 sqft apts or condos that now become homeowners or upgraded finally. not saying this is at all scientific. but the bubble blogosphere was that so popular for nothing.
This is why location is so important – even in a national downturn one zip will decline 50% (Oceanside) while others will decline 20%. No surprise here. The demographics and equity levels are totally different between zips.
Some predictors like to predict the worst because even a broken watch shows the right time twice a day. So although economists like Roubini are wrong over 80% of the time (he predicted a crisis in 2004, 2005, 2006, 2007, and 2008), when they’re right they’re suddenly among an elite group of psychics.
“The same title company that is always quoted with the worst foreclosure news confirmed that in Encinitas, Rancho Santa Fe, and Carmel Valley the percentage of option-ARMs and neg-ams mortgages in effect were 5.5% of those mortgaged, and they manually read every trust deed recorded.”
What’s the percentage of homeowners who used their home as an ATM via HELOC?
These charts are why I don’t think this will unfold like any previous bubble/recession recovery…
http://blogs.reuters.com/rolfe-winkler/2009/09/30/krugman-and-the-pied-pipers-of-debt/
Neg-ams aren’t the only problems, though. There are many people with regular ARMs and I/O loans who are paying little or nothing toward principal balances, all while prices are dropping.
Additionally, I’m thinking the “shadow inventory” is hidden in the “defaulted, but haven’t received a NOD” category. Been hearing more and more stories about people going for months, or even years, without paying a single cent, yet still haven’t been foreclosed on.
Ronald McMansion,
Will you ever give me a break?
I let you pour your constant barrage of negativity here, and it is non-stop. The one day I have a slight ray of sunshine isn’t going to get by you, oh no, you bring more.
You are either a competing realtor trying to take me out, or the most negative person in the world. I hope I never meet you, because I don’t want whatever you got, to get on me.
All anonymous too – why don’t you start your blog of negativity and work your tail off at getting the word out, instead of riding my coattails.
That book is on my nightstand. I’m a PAW, but this house is dragging me down just a bit š
Location, location, location rings true. Though I can’t get a comp because the nearest REO is on again and off again.
Did ocrenter just say there actually was lots of money sitting on the sidelines. Thats about the biggest 180 of the year. Sacrilegious I say!
JtR,
If it’s your request that I stay away from your blog, just ask. I’m not a realtor, and I have no beef with you or the information that you provide. I find it all very enlightening, your data and stories as well as the feedback from your followers.
If my posts come as an attempt to contradict your views or put you down, that’s not my intention. I’m seeing things from a different perspective and trying to express my views and feelings in order to gain feedback from you and others that follow you.
Ross’ statement from ‘The Millionair Next Door’ is from a very different era, and this points to the core of my feelings on this subject. I don’t think it’s a fair comparison to single out the people studied in that book who bought their homes in the late 70’s and early 80’s with people interested in purchasing a home today. I would venture to guess that most of those people in the book bought their home with 20% down which they had saved for over many years. They likely held the same job or changed jobs very infrequently over their careers.
That doesn’t reflect the society we live in today. How long do people stay at the same job or even career nowadays? I agree with the point of hyper-consumerism preventing the advancement of wealth, and that is the serious problem that America faces today. I honestly don’t think this recovery will play out the same as any previous one. I think we’re in a very unique, once-in-a-lifetime situation that will not be solved by some government stimulus. In fact, that will only make matters worse.
Nathan mentioned Cash For Clunkers. Many of the people who cashed in a gas-guzzling American car, did so for a more fuel efficient and reliable Japanese car. Since Toyota owners have an 80% loyalty rate, Detroit just lost current and future customers. So, the government help that Detroit automakers lobbied for is going to simply put another nail in their coffin. Be careful what you wish for!
I’ll say it again. Buy a home for half-off peak or plan on living there for a (very?) long time. That’s actually as optimistic as I can be right now. Sorry, Jim.
JtR,
I forgot to mention this, but the only reason for my anonymity is to help protect myself from the phishers and scammers that are out there. It’s not that I’m intentionally trying to hide something from you. I’m just trying to be prudent.
I’m also a little hurt that you said you’d hope to never meet me. Again, I have not intended to become your adversary. I’m just hoping to add to the discussion on a blog that seemed to have a fair amount of knowledgeable and open-minded individuals.
NODs may be down – but I think JimG is right… banks aren’t filing them even though loans are delinquent.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aXZinRhF5tlA
Banks With 20% Unpaid Loans at 18-Year High Amid Recovery Doubt
Oct. 2 (Bloomberg) — The number of U.S. lenders that canāt collect on at least 20 percent of their loans hit an 18-year high, signaling that more bank failures and losses could slow an economic recovery.
…
I’m convinced there are a lot of delinquent loans out there that are not getting NODs. Perhaps the banks/servicers can’t handle the volume. Perhaps the banks/mortgage owners don’t want to mark the loss. For whatever reason the NODs aren’t lining up with the delinquencies.
The end result of CV will be interesting to say the least. RSF has loads of inventory and prices are coming down fast,will some relocate to CV, probably a few. Then you look at the price drops for RPQ, Scripps Ranch and Carlsbad and wonder how CV can stay in it’s own little protected bubble, I don’t think it can. Lots of condos selling as REOs and more on the way. Just a matter of time before the SFR show up, or they could all just end up as short sales first.