Notices of default fell 13.8 percent while trustee’s deeds increased 17.1 percent from March to April, according to statistics from the San Diego County Assessor. Although trustee deeds increased from a two-year low of 844 to 988, the number is still well below the 2008 average. Conversely, the 3,673 notices of default, or NODs, filed in April were the third highest total to date, coming off two months of consecutive highs.
Foreclosure moratoriums toward the end of 2008 are the likely cause of both trends. The moratoriums led to a slowdown in notices of default from September to November 2008. Many NODs filed during that time period have worked their way through the typically 90-day foreclosure process, resulting in them becoming trustee’s deeds.
Trustee’s deeds are the last step in the process before a home becomes bank owned.
Year-to-date, the number of NODs filed in 2009 are outpacing 2008 by 10 percent. There have been 14,693 filed this year.
There has been an 18 percent decline in trustee’s deeds year-to-date from 2009, however, with 4,522 filed since January.
The lower number of trustee’s deeds resulted in one of the lowest inventory totals in months, said Alan Nevin, director of economic research with MarketPointe Realty Advisors. That, coupled with a recent surge of offers coming in for lower-priced homes, could cause an eventual spike in pricing.
“At some point, and I wish I could give you the date, but there is going to be a couple of major jumps in price,” he said. “It’s not going to be a matter of homes creeping up $5,000 or $10,000, there’s going to be a couple of $50,000 adjustments as soon as we officially run out of REOs (real-estate owned homes). And it doesn’t take long to do that.”
Nevin said he could not project when exactly the spike could occur, but said it is inevitable as the demand grows for a shrinking supply.
However, the large number of NODs could lead to an increased number of foreclosures within a few months. But San Diego State University professor of Real Estate Leonard Baron said he hopes banks will be able to modify loans of distressed homeowners.
“The banks are going to try not to force people into foreclosure, which, again, completely wastes everyone’s money,” he said.
Two years ago I was at a flower shop. There were several varieties of bouquets, but the one my wife wanted had wilted flowers. She thought of buying it anyways because it wasn’t that bad, but I noticed that when other bouquets sold the florist had a stash of exact duplicates hidden out of view they’d bring out. So at all times, every “unique” bouquet of flowers was “selling out” over and over. The same thing happens with paintings, and you always hear “supplies are limited, act fast” on infomercials.
The point is this is a standard sales practice and you need to buy a home based on a personal match, not a “buy now or be forever priced out” line of thought. It was just 4-6 years ago when that meme reached fever pitch.
No doubt REOs won’t dominate sales volume forever, but we’re not talking a matter of months here. We’re just beginning to see REOs on market from the record NOT numbers.
So make sure you have a solid down payment and a decent margin of payment for your mortgage, because without it you’re going to be “priced in forever” as we now say.
That said, REOs are offering great value compared to the competition right now. If you think the average house on the market is just a little overpriced, a REO is probably about right for you because it’s almost always significantly cheaper.
I just looked at some REOs in Carmel Valley and 4S Ranch, and if it weren’t for the unit location, condition, or age, it would have been a steal. I think they were fair priced, but personally I’m looking for move-in ready with a good unit location. Someone else will definitely love it. =)
Nah. I doubt there will be much price inflation-maybe some, but not a lot. There will be a lack of supply, but it won’t directly lead to signficantly higher prices. Buyers still expect bargins, and will only go so high in most cases. Plus, there’s the jumbo loan limit, which will cause anything above it to be very hard to sell. Also, once the eight grand tax credit expires December First, a lot of first time home buyers might drop out, damping down prices on the low end. (There might be a spike in the few months prior to the expiration of the tax credit, as people get less picky to take advantage of the credit, but then after it expires that mini-bubble will quickly burst.)
Basically, sales will go down significantly overall, IMHO, with prices being basically stable. Demand and supply will fall off in sync with each other, more or less.
The NAR has been saying it has been a great time to buy for years.Do you believe them now?At some point they have to be right.
Jim nailed this one with the tag “Psycho-babble”.
From the article, “Trustee’s deeds are the last step in the process before a home becomes bank owned.”
Am I wrong in thinking the author means to refer to Notice of Trustee Sale (NTS) and not trustee’s deed? I thought a trustee’s deed was issued when the lender takes the property back (REO), right?
So is the talking about REO’s or NTS’s?
Jim, I can’t see how George would actually find it reasonable to charge folks $100 per year to read this type of fluff piece.
Maybe George doesn’t find it reasonable. Demand and supply! =)
What I mean to say is, if someone would pay me top dollar for my used car, I’d sell.
Jim – Did you see this article in the WSJ a few days ago? It’s titled: “Banker: ‘What’d I Do
Wrong, Officer?’ Cop: ‘You’ve Got Algae In the Pool, Sir.’ Fearing Blight a California Town Makes It a Crime to Neglect Foreclosed Homes”
Here’s the link:http://online.wsj.com/article/SB124112509277274533.html
“At some point, and I wish I could give you the date, but there is going to be a couple of major jumps in price,”
How can demand for an expensive asset (ie. a home) be going up in a recession/depression?
Is it because people are losing their jobs?
Is it because union/city jobers are excepting concessions on pay?
Is it because of all the companies going out of business?
I’d like to know what exactly justifies a couple overall 50k spike in price?
“I’d like to know what exactly justifies a couple overall 50k spike in price?”
1. Keep up with the Joneses mentality
2. Conventional Wisdom
3. There is a sucker born every minute
I’d prefer to stick my money into an interest yielding CD than to buy right now. At least my money would be earning 3% instead of rolling over and dying.
There is no way in hell I would be sticking my money in a low yielding account right now.This is the time to set yourself up for gains in the future.Take some risk.Look at the people who took risk at dow 6500.They took a chance when it looked like the world was going to end.Buy a property that cash flows and sit on it for awhile.I guarantee you this is not the last real estate boom bust cycle that we will see.This is where real investors step up.
Look at the people who took risk at dow 6500.
That’s okay… later this year or early next you’ll have a crack at that again.
You said it Arizonadude, there are better investments than buying a “house”. If you want to be cash flow positive, why not invest in stocks that maintain or pay steady dividends and then reinvest them? That’s what I do.
The notice of trustee sale isn’t the last step, but close.
He should have said that ‘the trustee sale is the last step’ and the resulting paperwork is the trustee’s deed. The trustee’s deed is issued regardless of who buys it, the foreclosing bank or third party.
Buy now or be priced out forever!
“as soon as we officially run out of REOs (real-estate owned homes). And it doesn’t take long to do that.”
There were two orders of magnitude more people who took a risk on the Dow at 13000. Check the volume – 100:1. So sure, 1 winner and 99 losers at these extremes.
Alan Nevin has been and will always be a cheerleader type forecaster for the highest bidding entity usually the NAR. Wasn’t he the one who called for a “soft landing” of the San Diego real estate market in 05/06?? I wrote him an email in 06′ and told him we appraisers out in the field looking at properties (not computer models) were already seeing 5% – 10% decreases in values. His forecast while good for the NAR and its constituents was misleading, inaacurate and bad for consumers and the general public. I did not get response fro him. I would not take his forecasts seriously.