How hot has the market been lately? For the well-priced inventory, sales have been tremendous.
But with the multitudes of offerees, and the way the list prices are being overbid, doesn’t there seem to be ample demand to soak up at least a few more foreclosures? The banks have to be seeing the upsurge in activity and be thinking about unloading more REOs, what if they all get bought up?
Here are some examples of ones we’ve seen this year:
361 Bryan Point, Chula Vista
5 br/5.5 ba, 4,287sf
YB: 2007
SP: $1,301,500 2/07
LP: $585,900 2/09
SP: $630,000 3/09
Not surprised that there was a lot of action on this one, and that it sold over list – remember the youtube video tour? http://www.youtube.com/watch?v=6_F7l3_6KCo
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1559 Villa Cardiff
4br/3 ba, 1,983sf
YB: 1978 6,534sf lot
SP: $1,000,000 12/06
LP: $599,900 12/08
SP: $525,000 5/09
$525,000? This is the fixer right across the street from the I-5 freeway, with a spectacular view of it – here’s the youtube tour: http://www.youtube.com/watch?v=wHh2V1qPZFY
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1353 Ahlrich, Encinitas
3 br/2 ba, 1,633sf
YB: 1974 10,500sf lot
LP: $569,000 3/09
SP: $640,000 4/09
I usually don’t get too negative about the chances of a house selling for crazy money, but as you’ll hear in this video, I thought the LP was ridiculous – the house looked just like it did in 1974. Yet it still sold 12% OVER list price: http://www.youtube.com/watch?v=1nrW3tqbAmM
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1659 James, Carlsbad
4 br/3 ba, 2,216sf
YB: 1981 12,480sf lot
SP: $490,000 5/03
LP: $499,900 4/09
SP: $597,000 6/09
Sure, these former owners added a pool, but this house was a wreck when they bought it in 2003. They had refinanced with a loan of $637,500 in June, 2007, so they might have dressed up the interior too, but no photos included. Must have been decent though, sold for 19% OVER list price.
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958 Eolus, Leucadia
2 br/2 ba, 1,137 sf
YB: 1948 25,700sf lot
LP: $599,000 3/09
SP: $630,000 4/09
This looks like the best buy so far, because they only paid 5% OVER list price. But the house was run-down, the lot probably wasn’t splittable, and it was on cesspool septic system, though it did have cedar closets.
Here’s a youtube tour: http://www.youtube.com/watch?v=su2e8nS35mQ
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735 Lynwood, Encinitas Ranch
4 br/4.5 ba, 4,888sf
YB: 2003 9,373sf lot
SP: $1,076,000 4/03 (new)
LP: $1,449,876 11/08
SP: $1,162,500 4/09
They listed on range pricing but lowered it consistently, and by the time they found the buyer they were listed at $1,049,000 to $1,199,876, so they probably felt that they did OK.
But since THREE others on the street have gone pending – all higher priced, including a smaller house on the same side of the street!
Here’s a youtube tour: http://www.youtube.com/watch?v=ejoDeQ0qUpY
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9745 Tallus Glen, 4S Ranch
3 br/3 ba, 2,181sf
YB: 2004
SP: $444,125 7/2/08
SP: $525,000 7/29/08
SP: $530,000 6/19/09
Remember this one from last year? My client had picked this up at the trustee sale for an attractive price, and when he flipped it the same month, everyone called knife-catcher. But they didn’t get killed, in spite of a very small backyard and looking at a busy street.
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Just cherry-picking you say? Those are older closings, what about today?
Oceanside is a good test case, but is it just the low end that’s hot? SFRs under $200,000 are understandably hot when rents are higher than payments. But will it rise up the price ladder?
We listed these two on Friday:
4773 Sequoia, Oceanside
3 br/2 ba 1,006sf
YB: 1985
4,025sf lot
SP: $434,000 3/06
LP: $179,800 6/09
Offers started rolling in right away, and we’re up to 14 bids so far, with the highest OVER $220,000 net. While this price point is still attractive to investors (three all-cash offers), the owner-occupiers are willing to go much higher.
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398 Pismo Bay, Oceanside
3 br/2ba 2,031sf
YB: 1996
9,205sf lot
SP: $568,000 11/05
LP: $359,000 6/09
The original owner had the builder complete this floor plan as a two-bedroom, with a master retreat and a den – not the most marketable. It would seem that if there was going to be evidence of some hesitation in the marketplace, we might see it here. The location is by the back gate, buried amongst a bunch of inferior older tracts, and a long way from town – about 30 minutes to the I-5 freeway in the morning.
But four offers are in, with a couple close to $400,000.
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Both of these were helped by Jon Mann’s production – he has two model matches to Pismo Bay that he listed for $379,900 each. One of those just closed for $390,000 VA, but it was the more traditional four bedroom set-up.
Mr. Mann is the guy buying 5-10 properties per month at the trustee sales. According to the MLS, he has 57 properties in escrow currently, with an average market time of 8 days – including the 1,400sf house on Eolus that he listed last week for $649,000, and may have picked up a leftover buyer from the one that just sold for $630,000 (above).
Everywhere you go, properties that are priced right are garnering multiple bidders. Even if the banks unleash a slew of foreclosures, there seems to be plenty of unsuccessful bidders that wouldn’t mind having more inventory.
How long will it last? If more REOs were being listed, and you saw them blowing off the market too, would it change anything for you?
I worked for a startup company that got acquired by Sun Microsystems in 2000. Since I had bought stock at $31.25 and sold it at $59, I figured the Sun stock purchase plan was a no-lose scenario. Shares of SUNW (now JAVA) were trading then around $10, and could buy in via ESPP at $8 or so. How could I lose, right?
I sat on those shares for years as they hovered around $3.75. Finally sold them years later to pay off credit card debt and wrote off the loss on my taxes.
My point? Even when there are plenty of people who think something is a good buy, it can still go down a LOT. I mean, Sun went from $45-$50 a share to $8! How much lower could it go? The answer? 60%.
-Erica
“Knifecatcher” callers, start your engines!
I’ll go first: knifecatchers!
Let’s see if this keeps up come Christmas time, with the eight grand buyer’s credit expired, interest rates at 6% or higher, and the spring/summer peak buying season long since passed.
Thanks for the painful SUNW stock memories! 🙂
I’m not sure I’d call Knifecatcher on all of those – some are at ~50% off peak pricing. If it’s a knife, it’s got to be getting pretty dull at that point.
This winter will indeed be interesting to see where rates are, REO inventory, and whether or not that $15,000 tax credit makes progress.
The show will start in September when 11000+ NOD from the last 3 months turn into 2000+ NOT per month.
Bring ’em on – all those potential buyers who are making offers yet not buying would like to!
Those who have waited patiently for better-priced inventory would like to see it too.
Plenty of demand, currently.
BTW, did you see how many trustee sales last week in Carlsbad went back to the beneficiary?
One, a condo nobody wanted for $199,000.
You know Carlsbad, the town with 580 foreclosure notices?
The others from last week:
25 postponed
5 cancelled
2 sold at trustee sale.
I think loan mods and short sales are closing some of these, I’m going to keep the list and track ’em. But there are 7 of 33 that didn’t make it back to the bene.
The 4S Ranch one is interesting; didn’t see it on my first read.
The house has been sold 3 times in roughly a 1 year span. The first time being a trustee flip which is fair enough, but still.
I added it later, it just closed.
I’d like to add some REOs that are well-priced and not selling, to give the bears equal time.
See any in Carlsbad to Carmel Valley?
That 4S Ranch home sold for $710K in 2004. 25% off a 2004 price is not a bad deal for anyone who doesn’t mind the mello roos and HOA.
I see some of this same weirdness in the neighborhoods I’ve been watching (south of JtR’s core area). A non-updated, 2300 sq ft house with heavy patterned wallpaper, green carpets, 70’s kitchen and bath, overlooking highway 52, went pending in a week at $750K. Yet a similarly sized, cheaper, more updated house overlooking Rose canyon languished months on the market at $30K less. Depending on which house you use as your yardstick, either the market is strongly robust or languishing in the doldrums. There was a heck of a lot more consistency in pricing during the bubble years, even if it was consistently overpriced!
What is the spread between the offers for those 2 houses?
Where is the FHA offers at versus conventional versus cash.
Or better to say where are the offers at by down payment?
All offers are not the same, there is a risk in accepting a marginal buyers offer.
Well-priced REO’s in Carlsbad that aren’t selling? hmmm…that’s a tough one. What about not-so well-priced REO’s that aren’t selling? It looks like that one on Turquoise in Mar Brisa is still available for $629k.
btw, ran into an “open house” on Rock Ridge today. The owner is a landlord, the tenants just moved out this past Saturday. She had her realtor friend from San Francisco come down to help her “test” the waters to see if she could sell. Ask price $649k.
I remember the first three of these: Dollhouse buddha, freeway fraud, and that 70’s show.
Jim,
So what is the magic number to price at for sellers that you advise?
star low and wait for multiple offer to come in?
start slightly high and lower 5% every 1-2 weeks?
do you start right at the comps just sold per sq. ft?
if the market is heating up is there momentum for non foreclosures and non short sales right now?
Countrywide/BofA’s formula is right on the money, it works every time.
I BPO’d Sequoia at $199,900 on Thursday, and they list it for $179,800 + $6,500 for carpet and paint.
5% under (or more), plus new carpet and paint beats everybody else in the market….for now.
Bank-owneds sell for more than non’s, because buyers want bragging rights. “I stole one from the bank” will be the summer mantra around the BBQ!
Let’s just say if I were a bank, I’d be getting properties onto the market so fast right now, it’s make your head spin. Jim’s right–it’s hot to “steal” one from the bank, and it’s working for now.
I think if the stock markets continue correcting downward, the RE market will go soft sooner, but surely by fall/winter I think the demand is going to dwindle–probably by a lot. And then they’ll have missed this surge.
“Strike while the iron is hot!”
There are a few new decent starter homes on the MLS in the Encinitas Area (two in Village Park and one across ECR near Crest Dr in the Summerfield area). I think one on VP is REO. Obviously we are in June so I’m sure these homes will sell albeit one in VP and the other in Summerfield back up to MAJOR streets (VP is located in a cul-de-sac but is bordered by Village Park Way and Encinitas Blvd). I would venture to say all homes will sell in the mid 500 range for a 15% – 12% loss for the ones that purchased in ’05 which looked like an attempted flip so I would say their loss could extend to 20% considering the money they put into the house. Still not bad at 12% off peak. Not looking forward to the market drop in the Fall/Winter and time will tell if price recovers to Summer ’09 in Summer ’10.
It will be interesting. It is clear things are selling now. Of course last time there was a buying frenzy we know what happened.
I am also interested to see if all these cash flow investors are able to find tenants. I am also interested to know if they can afford the repairs after the tenant damages the unit.
Unemployment keeps rising, state workers may receive pay cuts, and likely higher taxes too. Hard to see any of that leading to anything other than higher home prices going forward LOL 😉