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In August we saw a spike in NODs, mostly due to Bank of America’s increased output.

It was mentioned here that last month’s NODs appeared to be slowing.  But I just figured out that the NOD reporting by foreclosureradar.com runs about 10 days behind – even though they report the results of trustee sales the same day.  Here are the September NODs - and it appears that we’re back to “normal”, after the August bump that was driven mostly by Bank of America. (revised from earlier today)

Of course it doesn’t mean much unless they are going to actually foreclose on defaulters, which lags behind by at least four months.  Lately, the completed trustee sales aren’t on the rise:

Hopefully we’ll be in for a big spring kick, led by BofA!

How is that spring selling season coming along?

North San Diego County Coastal detached sales and pricing, January through May (5 months):

The ez-qual, no money down loans up to $1.5 million finally stopped in the summer of 2007, so the best comparison is between the last four years.

Lately the momentum has started to wane, and those attempting to sell need to adjust their price if they think they are going to get out this summer:

Here is the average LP/SP $-per-sf of detached properties sold in North SD County Coastal:

But the recent action has been startling – last week the average LP-per-sf of the 52 pendings was $461.35. 

Click here Pendings between Feb 28 – March 6 for the list,  and you’ll see that several long-time-listed properties opened escrow last week, and others with head-shaking list prices. 

Yes, it doesn’t mean anything until they are closed. 

But if buyers see and hear that “prices” are going up, it won’t help their anxiety level. 

Observations:

• It’s become a binary, “yes or no” decision.  If they like the house, they buy it, with less concern about working to get a great deal, and more concern with ending the search.
• “Quality” ranks much higher than “great price”.  The most-expensive house in the tract is more likely to sell than the cheapest (see the last one on the attached list).
• Listing agents are exceedingly over-confident, and not willing to deal.

The shortage of quality inventory is the cause, and with buyers gravitating towards the best available, there is a scramble to snatch them up – all while the dogs and OPTs lie around untouched.  In a few months we may be hearing of higher prices and lower sales, which will really set the pundits on their ear!

If you’re trying to gauge your chances of finding a seller who is distressed, here are the number of detached properties that have listed on the MLS as short sales (SS), bank-owneds (REO) or regular sellers (Reg.), plus the number of SFR trustee sales completed that either went back-to-bene (BTB) or were bought at the steps by a 3rd party – since March 1st:

This year has seen a relatively big increase in short-sale and REO listings compared to 2009, but they’re still only 12% of the total listings that have been coming on the market recently in San Diego’s North County Coastal region. With only 1-2 properties being sold at the trustee sales per day, there isn’t much to look forward to this summer. The regular sellers won’t be feeling much pressure from distressed neighbors, and likely to hang around waiting…..for something.

We have discharged all previous assumptions, and are open to what the future may bring for the local real estate market. 

Let’s examine – what are the possibilities, given these conditions:

1. Low sales volume.

2. Low pressure on pricing.

3. Not many foreclosures.

4. Abundant realtor fraud.

5. Lots of buyers willing to buy, but picky on price & condition.

Last year’s Spring Kick was a dud, by all accounts.  Sellers came out blazing with high prices, but buyers didn’t bite - and the sales volume was lower than usual.  When sellers succumbed, and got more realistic later in the year, then more sales occured (almost as many as 2005):

Buyers are holding tough, but I think we’ll probably see this year’s number of Spring Kick sales be better than last year, helped somewhat by the expiring homebuyer tax credit.  But sales will still be low, compared to previous years.

Won’t low sales volume + anxious buyers = rising prices? 

It has in the past, but thankfully we have jettisoned all previous theories. 

What are the barriers to increasing prices? 

The fraud will play a role in keeping a lid on pricing, and I think we’re seeing enough low/fraudulent sales that it’ll temper buyers’ enthusiasm.  Buyers would need to see a flood of higher-priced closings for them to panic.  A wider price variance could cause more confusion, as sellers focus on high comps, and buyers use the low sales for decision-making – and lead to The Big-Stallout.

The average cost-per-sf statistic is less then perfect, but in the graph above shows a limited decrease in pricing since the peak.  It there had been a huge dive in pricing, there would be ample room for a spike, but that’s not the case.  If there was a flurry of higher sales it might be noticable, but an occasional high comp won’t create a trend.

Where does that leave us?

Without a Spring Kick game-changer we’re just going to plod along.  A few buyers will get lucky with the trickle of well-priced listings, and the remainder will be left wondering what to do.

Possible game-changers:

1. More over-priced listings = The Big Stallout.

2. More well-priced listings (REOs and short-sales) = more sales/frenzy that could possibly lead to upward momentum on pricing.

3. Higher mortgage rates (over 6%) = The Big Stallout.

What can buyers do?

1. Hang in there – be patient.

2. Compromise on parameters – area, size of house/yard, etc.

3. See if you have any deposits left at the Bank of Mom and Dad.

4. Eliminate or reduce other expenses to afford higher mortgage payments.

5. Wait until 4Q10, and hope that a Spring Kick frenzy might exhaust demand.

6.  Stay tuned to bubbleinfo.com!

If you’d like some assistance, I’m here for you.

Are you thinking, “what can I expect this year?” 

For those watching the new listings that are hitting the MLS these days, it may seem familiar.  So far, the 2010 Spring Kick is looking much like last year’s.

Courtesy of our friends at Housingtracker.com, we’re seeing the usual uptick in new inventory, similar to recent years:

But during the Spring Kick season last year, the median list price of higher-end new listings went ballistic - between February and June, the median asking price rose from $663,000 to $865,958, an increase of 30%:

We haven’t seen that happen in recent years, did it cause the higher-end pricing to increase?  Below is the graph of just the 75th percentile of North SD County Coastal region monthly median sales prices, showing relatively-flat pricing:

In 2009, the monthly detached sales for North SD County Coastal looks relatively normal – the usual increase in closings between May and August, with some extra pop in September and October, once sellers got off their high horse:

Look for a flood of overpriced higher-end homes coming on the market, but a relatively dull Spring Kick, because the buyers aren’t going for it.  Either homesellers price it right, and sell, or they don’t.

From the North County Times:

For the first time since home prices started diving three years ago, the median price for a house in North County showed a meaningful uptick in April, a sign the region’s housing market might be transitioning toward stability.

To be sure, there remain substantial pressures on the market that could push prices down further.

Nonetheless, the increase in the median price – the middle point of all sales – is significant.

In April the median price for a detached house was $390,000, an increase from $364,000 in March but still down 24 percent from $510,000 a year earlier, according to a report released Friday by the North San Diego County Association of Realtors.

At the same time, the report showed two distinctly different markets: the high-end, with few foreclosures and no sales; and the low-end, with lots of foreclosures and booming sales.

For example, the market in Del Mar has 30 months of inventory, a measure of how long it would take to sell all active listings based on last month’s sales rate. That is five times higher than the six months of inventory that is widely considered to describe a normal Southern California market.

On the other hand, western Vista showed two months of inventory.

Further, that same ZIP code in Vista – 92083 – has more homes that are “pending,” meaning the sales are in escrow and could close in May, than active listings for sale, according to numbers provided by Jim Klinge, a real estate agent in Carlsbad.

“That is smoking,” Klinge said. “You could be 10 percent too high on price and sell right now because of this frenzy on the low end.”

Indeed, several real estate agents have reported that there are so many buyers interested in low-priced foreclosures that bidding wars have erupted, with 10 to 20 offers per listing.

At the same time, the median price is a crude metric that does not necessarily translate to overall price increases. It is simply the middle point of all homes that sold in April.

Robert Brown, an economics professor at Cal State San Marcos who compiles the HomeDex report for the Realtors association, said the market is split into three segments: red-hot sales on the low-end; a slight resurgence in homes priced from $400,000 to $600,000; and very few sales in the high end.

Indeed, the median price increase could be the result of more “normal” sellers getting into the market – homeowners who have taken care of their properties commanding a premium over a glut of beat-up foreclosures, said Kurt Kinsey, a real estate agent in Oceanside.

And buyers are looking to stay in the home for longer, meaning they might be willing to pay more, Kinsey said.

“A home is becoming a home again,” he said, speculating that the average homeowner during the last few years moved after two years and that time in a home is going to increase to five years.

HomeDex reported relatively mild sales for North County, increasing 6 percent from a year ago to 723 sales in April – well below the 1,117 houses sold in April 2005.

And even the increasing median price left plenty of room for uncertainty, with some analysts hesitant to declare recovery for the housing market.

“It’s hard to say,” said Brown, the economics professor. “We did have this little bump up, but I don’t expect any major price movement barring something happening.”

For Brown and other analysts, the largest area of concern is a glut of “pre-foreclosures,” representing mortgages in default but not yet seized by the bank.

In March, North County set a new high for this recession in such default notices. April numbers, due out early next week, are expected to be just as large.

And even though areas such as western Vista have just as many homes in the sales process as homes up for sale, those pre-foreclosures loom.

Indeed, despite booming sales in western Vista, for every home sold, two others were in default, according to ForeclosureRadar, a tracking firm in Northern California.

Analysts say banks have slowed the foreclosure process, meaning thousands of homes in foreclosure have not hit the market.

For even more skepticism, Klinge, the Carlsbad real estate agent, said the buying frenzy on low-end properties could be purely seasonal – sales traditionally pick up during the summer.

“My guess is it will settle down again,” Klinge said regarding the emerging bidding wars and 10 to 15 offers per listing. “You’ve got a bunch more foreclosures coming on, so when you get to the last three to four months of this year, you’ll get one to two offers – if you’re lucky.”

ZACH MENTIONED THE GLUT OF PRE-FORECLOSURES

(I’d guess that 25% are in MLS active or pending already)

Carlsbad to Carmel Valley, attached and detached:

Active listings in MLS = 1,666

Pending Listing in MLS = 431

NOD, NOTS, REOs = 1,977  (x 75% = 1,482)

Total solds Jan 1- April 30:

1997 =  904

1998 = 1,051

1999 = 1,131

2000 = 1,248

2001 = 1,015

2002 = 1,347

2003 = 1,227

2004 = 1,297

2005 = 1,155

2006 = 907

2007 = 912

2008 = 646

2009 = 562 

Here’s more mis-direction on behalf of NAR and mainstream media:

March 23 (Bloomberg) — Sales of previously owned homes in the U.S. unexpectedly increased in February as record foreclosures pushed down prices and lured first-time buyers into the market.

Purchases rose 5.1 percent to an annual rate of 4.72 million from 4.49 million in January, the National Association of Realtors said today in Washington. The median price slumped 15.5 percent from a year ago, the second-biggest drop on record, and distressed properties accounted for 45 percent of all sales.

This is going to add more false hope for sellers of higher end homes – they’ll be prone to think that it’s their turn now, once the jumbo loans are funding again and the ObamaPlan has a chance to work.

Maybe the lower end is hot, for the time being, but each market segment is different.  The odds of selling the higher-end homes are going to greatly increase each month from now on. 

Look at this chart below – if it weren’t for the blip last July, the $600,000+ sales in North County Coastal have peaked in May or June in recent years.  Those are sales that opened escrow in April and May (click on it for clarity):

For the 1,525 active listings in SD North County Coastal (La Jolla to Carlsbad) above $600,000, you need to lower your price now, and keep lowering it so you get into escrow by the end of May. 

The March 2009 number on the chart is projected at 80 – there are only 50 closed so far this month, and 206 pending.

If 150 of those pendings close over the next two months, we’re still going to have only 100 or fewer closed sales in any month this year – and there are 1,525 PROPERTIES FOR SALE!

By the end of May, the higher-end buyers are going to be licking their chops.

Today’s article on cnbc.com has some decent quotes mixed in with some psycho-babble:

http://www.cnbc.com/id/29779920

While great for potential buyers, the added glut of housing could push prices even lower, further depressing the market. At the same time, it could actually jump-start housing by bringing more home-buyers into the market.

With stimulating the real estate market a principal goal of Washington policymakers, the temptation for buyers and sellers to jump into the market could be irresistible, especially if interest rates stay low.

“The first signs of life you see in home sales you’re going to see met with a lot more inventory,” says Michael Pento, chief economist with Delta Global Advisors. “The last thing you want to do as to add more inventory to an already-oversaturated market.“

 Agreed, if we see a flood of new listings, it’ll probably stymie any momentum that might be building.  How are we doing so far? 

Here are the new detached listings coming on the market, and number of detached closings, between March 1-15:

No big explosion of new listings in San Diego County, at least not yet. More evidence of what we’ve been seeing of closings; the lower-end is hot, higher-end is not.

Off-topic, but just heard from somebody who is at the gun show – they’re in a three-hour-wait line to buy ammunition!