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The foreclosure activity around Carmel Valley, Del Mar, and Solana Beach has been sluggish, to say the least.  The numbers of SFRs on the auction lists are low, and they’re filled with loan modders and current short sellers.  With only a handful getting foreclosed each month, the overall inventory of attractively-priced quality homes is discouraging.

Here’s a brief youtube tour – the first house is scheduled for trustee sale on April 23, with an opening bid of $1,327,500, and the other one on the same street had an opening bid of $1,257,031.  The other four bank-owned homes had opening bids of $967,816 (on Winstanley), $835,000, $610,000 (on Barbara), and $1,900,000:

It looks like servicers are coasting into the HAFA/short-sale era, which officially begins April 5th. Here are the foreclosure stats from the last 12 weeks:

My guess?  The HAFA package will encourage borrowers to pick a lane – either loan modification or short-sale.  But there are probably enough strategic defaulters to keep it busy down at the court house steps, but so far there have been very few quality properties at attractive opening bids.  I’m checking the list everyday, and I haven’t gone down to the ‘steps once this year!

December 15, 2009 – ForeclosureRadar.com, the only website that tracks every California foreclosure and provides daily auction updates, issued its monthly California Foreclosure Report for November 2009. Despite apparent headline month-over-month declines in foreclosure activity, the real story requires looking at changes in the average daily activity. November had only 18 days on which filings could be recorded or trustee sales held because of fewer days in the month, Veterans Day and the Thanksgiving Holiday, while October had 22 recording days, and 21 trustee sale days.

After adjusting for this difference in days we find little month-over-month change in the statistics, with the exception of Notices of Trustee Sale which declined 13.4 percent, Cancellations, which rose 40.0 percent, and Sales to 3rd Parties, which rose 8.0 percent on a daily average basis.

“We’ve been waiting to see some impact from the Home Affordable Modification Program,” says Sean O’Toole, Founder and CEO of ForeclosureRadar.com. “The 40 percent increase in cancellations this month is likely just the beginning of what we expect will be a wave of cancellations under this program”.

Despite the significant drop in filings of new Notices of Trustee Sale, and an increase in the number of Cancellations, the number of foreclosures Scheduled for Sale still rose.  The simple reality is that homeowners are continuing to enter foreclosure faster than they are coming out.  This will likely continue until we see meaningful progress on loan modifications, or the often predicted “foreclosure wave” finally occurs.

Over the weekend I was discussing with a new client my outlook for 2010.

He said that in person I sounded more optimistic about the market than on the blog, and I agreed.  Some is due to trying to provide all evidence and let you decide, but more is due to recent activity.

Watch this youtube, and you’ll see reasons why I think the local real estate market is going to take off like a rocket in 2010:

Here is more from our trustee-sale investigation. 

When the trustee sale has no bidders, and the property goes ‘back to bene’, how does the bank perform in the open market?  This is a review of the sixty Bank of America and forty of the Wells Fargo REO sales since September 1st:

When was the house purchased by the former owner?

2002 or before:  24 

2003:  8 

2004:  20 

2005:  17 

2006:  20 

2007:  11 

There are a number of long-time homeowners who are now renting or staying with family (more than half owned for at least 5 years!).

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Was it a purchase or refinance mortgage that was foreclosed?

Purchase:  42 

Refinance:  58

Whether they knew it or not, 42% of the buyers were speculators.  When things didn’t work out, they weren’t willing, or able, to endure.

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Of the 42 purchase loans that got foreclosed, when did they buy?

2004:  5

2005:  13

2006:  16

2007:  8 

Those who purchased in 2004 and 2005 could have refinanced by fogging a mirror in 2006, but didn’t.  Were they already underwater?

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Opening Bid vs. Eventual REO Sales Price

Sold REO for at least $100K more than OB: 5

Sold REO for $50,000 to $100,000 more than OB:  18

Sold REO within $50,000 of OB:  62

Sold REO for $50,000 to $100,000 less than OB:  5

Sold REO for at least $100,000 under OB:  10

Generally they are getting the opening bids pretty close to retail value.  But if you are really good at flipping, there is excess opportunity if 23% of the ‘back-to-bene’ properties are selling for at least $50,000 more than the price you could have paid on the court house steps.  Note that 15% sold for at least $50,000 under OB price too.

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Only six of the 100 were in our stretch from Carlsbad to La Jolla, and only two of those were houses (both in Carlsbad).  There were a lot of condos and Chula Vista properties!

Take a ride around town on the “Euphoria Express”, and see how some recent REO listings have been selling:

When the big bombers start falling from above, it can’t help but squish everything below.  This Pulte tract house in La Costa Greens sold for around $1.3 million in 2005:

A few months back after this house was foreclosed for the second time, I went by and found a door open, and peeked inside for a quick look.  There has been workers there ever since, so hopefully we’ll see it back on the market at some point – and maybe get an after-look?