The prime-time selling season runs from Super Bowl Sunday to the Fourth of July. How has your area been doing?
We should start seeing some of the unsuccessful sellers figure it out, and either cancel their listing, or lower their price over the next 30-45 days.
Here are the active detached listings for each area, the percentage of them that have been on the market for 90 days or more, the June Y-O-Y closings, and the change percentage in sales:
Town or Area
Zip Code
ACT
%90+
SOLD June 08/09
% chg.
Cardiff
92007
45
38%
5/2
-60%
Carlsbad NW
92008
69
45%
15/13
-13%
Carlsbad SE
92009
133
29%
35/39
+11%
Carlsbad NE
92010
37
38%
8/15
+88%
Carlsbad SW
92011
95
39%
17/13
-24%
Del Mar
92014
141
70%
10/12
+20%
Encinitas
92024
190
68%
37/36
-5%
La Jolla
92037
293
48%
15/20
+33%
O-side W.
92054
68
21%
31/20
-35%
O-side S.
92056
63
20%
48/50
+4%
O-side N.
92057
95
28%
48/45
-6%
Poway
92064
120
52%
36/42
+17%
RSF
both
345
62%
12/4
-67%
San Mrcs N.
92069
51
20%
31/28
-10%
San Mrcs S.
92078
80
26%
41/47
+15%
Solana Bch
92075
82
32%
5/7
+40%
Vista S.
92081
50
16%
24/20
-17%
Vista M.
92083
33
13%
20/29
+45%
Vista N.
92084
82
38%
22/30
+36%
Sorrento
92121
7
14%
4/5
25%
West RB
92127
164
74%
40/35
-13%
RB
92128
86
26%
40/44
+10%
RP
92129
48
13%
30/32
+7%
Carmel Vly
92130
217
75%
39/31
-21%
Scripps Rch
92131
71
20%
19/30
+58%
In bold: Triple-digit active listings, with more than half of those on the market for more than 90 days, and double-digit drop in Y-O-Y sales (beware!)
In italics:Actives = 10x last month’s solds (beware!)
Look at Rancho Santa Fe: 345 actives, and four sales last month! 86-month inventory!
Mortgage fraud-related Suspicious Activity Reports referred to law enforcement increased 36% to 63,713 during 2008, compared to 46,717 reports in 2007, according to the Federal Bureau of Investigation’s 2008 Mortgage Fraud Report.
While the total dollar loss attributed to mortgage fraud is unknown, financial institutions reported losses of at least $1.4 billion, an increase of 83.4% from 2007. The report showed that more than 3.1 million foreclosure filings were reported on approximately 2.3 million properties nationally during 2008, up 81% from 2007 and 225% from 2006. As of 2008, the Western region of the U.S. had the most pending FBI mortgage fraud-related investigations.
According to the FBI’s report, the top 10 mortgage fraud states for 2008 were California, Illinois, Texas, Georgia, Ohio, Colorado, Maryland, Florida, Missouri and New York. Rhode Island, Massachusetts, Pennsylvania and the District of Columbia were newly identified as having significant mortgage fraud problems.
We are largely hostage to the way our mind works. According to prospect theory, pioneered by psychologists Amos Tversky and Daniel Kahneman, the idea of losing money is a much more powerful motivator than a gain.
Our brains are telling us it’s painful to price our homes to reflect 20 percent to 50 percent losses in market values. So sellers overprice houses and wait for something to happen.
A myopic, loss-averse view of the market, for example, means listing for $500,000 or more when comparable upscale homes are selling for $400,000 or less. I have seen it in my suburban Chicago neighborhood, where homes have been on the market and unsold for years.
Our loss-aversion fears are so powerful that they override our logic circuits. We tend to ignore economic reality because we are emotionally anchored to our homes and values based on boom-era prices. It’s like holding on to a favorite stock long after it has tanked.
There are also influential cerebral centers for optimism and self-confidence. We hang on to properties, falsely believing that prices will rebound to the bubble years of 2005-2006.
FreedomCM heard that Bank of America has stopped doing short sales in Nevada – is that a good idea?
The whole idea is a slippery slope – once lenders allow a few homeowners to sell short, doesn’t it create the classic moral hazard?
Today there are MORE PENDINGS THAN ACTIVE LISTINGS in San Diego County. Let’s look at how many are short sales in process (the calculating is a little tricky, but I think this is accurate…..well, as accurate as the Sandicor MLS can be):
Det & Att
Total #
Shorts
Percent
Actives
8,922
1,087
12%
Pendings
10,845
5,494
51%
09 Solds
15,890
1,960
12%
Sure, there are plenty of short sales that are pending, it’s because they take so long to process them. We just received approval this week on one that we started five months ago!
The number of short sales closing each month are on the rise:
You’ll hear people say it is cheaper for a lender to short sale, rather then foreclose, but I’m not so sure.
1. The agents are driving the list prices ultra-low to make a short sale attractive to buyers.
2. The staffing needed to underwrite the sellers’ financial packages aren’t needed when foreclosing.
3. The additional number of debtors who could make payments, but are gaming the system.
The short-sale specialists include a clause for lenders to sign that releases the homeowner from liability on recourse loans, and I guess the banks are signing them. The debtors are getting off virtually scott-free.
Lenders should stop allowing short sales, and foreclose on anybody who can’t, or doesn’t want to make their payments. It would ease up on staffing requirements, streamline the liquidation, and probably put more money in lenders pockets.
My intention was to point out the future of the real estate business – it’s going to get tougher on agents who can’t keep up with the hustlers.
There are plenty of questions about the ethics of this type of deal, where the agent approaches an over-encumbered homeowner and puts together a sale with their waiting buyer, without exposing the property to the open market. They then throw it on the MLS for all to see a new listing they can’t buy, because the deal is already done.
But let’s examine this case further, shall we?
Here’s is the property in question:
3302 Azahar Place, Carlsbad
4 br/3 ba 2,536 sf
YB: 1975
Lot size = 11,100sf
SP: $580,000 1/04
LP: $450,000 7/09 Contingent
The photo above is in the current listing, but the agent got it from the old 2004 listing. Here’s how the house looked early this morning (click for close-up):
The owners have received their NOD, so they won’t be there much longer anyway. What can the lender, Wells Fargo Bank, look forward to if they were to foreclose on their $650,000 worth of refinance loans, instead of allowing the short sale to go through?
The agent involved didn’t include any additional photos, but mentioned that the house needed TLC, which is code for full makeover required. These are 1970’s tract houses that’ll need $100,000 just to get started, so I’m not sure that WFB would get much more than $450,000 on the open market, between the lousy condition and other action nearby.
Here’s what they’ll see within a couple of blocks:
3004 Azahar St., Carlsbad
4 br/2.5 ba 2,636 sf
YB: 1979
Lot size = 10,890sf
SP: $315,000 1/98
LP: $459,900 4/09 Contingent
This is the agent who started the run in the neighborhood, though this house might be the worst floor plan ever conceived. In April we didn’t have the ‘contingent’ status yet, so we don’t know exactly when she contracted with the buyer, but with comps in the $600,000s and higher nearby, it was probably another “smoke-job”. But it probably isn’t worth any more than list anyway.
If you look closely you’ll see a ‘door ornament’ on this one, but it isn’t a foreclosure notice – but similar. Bank of America has been aggressive in sending crews in person to monitor the condition of the defaulting properties, and they are maintaining the vacants. More on this later.
3020 Levante St., Carlsbad
4 br/3 ba 2,653 sf
YB: 1979
Lot size = 12,632 sf
SP: ?? (in escrow)
LP: $575,000 Pending
This is the other version of the ‘smoke-job’. The buyer (soon-to-be-seller) of this home has already processed the package with the seller’s lender, and is wrapping up a short sale. Feeling confident being able to close that deal, he has now put it on the open market to flip it to a second buyer. This is what’s known as a “double escrow”, which is illegal if not disclosed to all parties.
But look at what could go wrong – the current homeowner is facing his trustee sale on Wednesday, and the amount owed is $735,547. If the trustee sale doesn’t get postponed again, and both deals fall apart, and the bank takes it back to try their own resale, probably in the $400,000s. Or if the trustee sale is delayed again to allow for the short sale to close, at what price is it worth it for the flipper to buy? It must be around $450,000? Which, based on these other two deals, would be seen as retail if the second buyer’s appraiser gets picky. The flipper could get stuck with this one over appraisal issues on the flip.
All three of these houses are old and hammered – a minimum of $100,000 in improvements are needed to bring them into the 21st century. If you are bummed about missing these “deals”, think again.
These three “low” sales are expediting the price declines.
Here’s why they are better than REOs:
1. No open market exposure probably means lower-than-market pricing, for now.
2. No repairs means low pricing.
3. Long, drawn-out escrow probably means lower pricing to get buyers to stick around.
These short sales WILL BE THE COMPS that will help determine the future pricing – especially if the foreclosure tsunami runs through here. Long-time homeowners who are thinking of selling might ignore these, but the foreclosing banks won’t – they’ll price all the REOs in the nighborhood over the next six months based on these.
The goal for buyers is to LET THESE HAPPEN, and then scoop the future listings that are in better shape, but priced about the same.
Back to BAC monitoring the homes in default, but not yet foreclosed. I spoke to one of the field techs, who is one of the fifteen independent contractors state-wide that handle the lock-changing/cleanouts/lawn-trimming tasks for BAC. He said that they are cutting the list of 15 contractors down to three for the entire state, and those three will be responsible for sub-contracting.
It could be another indicator of how B of A will be handling the Countrywide REOs in the near future: to send them to a third-party REO outsourcer who’ll then contract with individual realtors to sell them (which has been long-rumored on the street), a method which has proven to be less-productive, and very frustrating for all parties.
This video was shot in mid-April about a red-hot 2,724sf Carmel Valley listing, priced at $765,000.
The agent had a ton of interest, and raised the price twice, first to $778,000 and then to $798,000, and he had three offers over $800,000 immediately.
End result?
The bank foreclosed last week. Their opening bid? $724,956, but no takers.
Bubbleinfo.com readers took kindly to Kwaping’s idea that we include significant homes for sale, so here’s another:
From the L.A. Times:
The Frank Lloyd Wright-designed Ennis House in Los Feliz has landed on the Multiple Listing Service at $15 million.
The 1924 concrete-block structure has four bedrooms and 4 1/2 bathrooms in about 6,000 square feet. The Mayan-inspired California landmark — it is a state landmark and listed on the National Register of Historic Places — sits on about three-quarters of an acre with city, canyon and ocean views.
The seller is the Ennis House Foundation, a nonprofit that has spent about $6.5 million to restore the earthquake- and water-damaged estate. The house “needs more stewardship at this point than a small nonprofit can sustain,” the foundation states on its website.
It is estimated it will take an additional $5 million to $7 million complete the restoration.
The largest and loudest of Wright’s four concrete-block houses in L.A., the Ennis House suggests what the greatest of Modernists would have done with a commission from the Maya Empire 700 years earlier. A heavy, elongated mass constructed of 16-by-16-inch concrete blocks (most textured with an ornate pattern) and sited majestically on a hilltop overlooking Griffith Park, the building appears to be more than a house — an elegant fortification, perhaps, or a temple.
It’s a house very much designed for the site, with consciously framed views of Los Angeles built into its plan. A nod to Wright’s genius is that “It doesn’t feel oversized,” said Dishman, whose organization is helping to restore it. In spite of its grandeur — or because of it — you might wonder what it would be like to live in the Ennis House, especially if you’ve ever been there at night.
It was used to film a number of pictures, including Blade Runner, Grand Canyon and The House on Haunted Hill and tv shows like Buffy the Vampire Slayer, Twin Peaks and South Park.
According to his widow, this was the only house that the late rock star Jim Morrison ever expressed an interest in owning.
CurbedLA mentioned the stoty here, and included more photos:
Sales of foreclosed houses soared last year as investors and first-time home buyers swarmed over what were considered bargain houses. This year it’s been unusually quiet, says Jerry Abbott, a broker and co-owner of Grupe Real Estate in Stockton. That doesn’t make sense, he said, because he sees many houses in foreclosure in the city.
But just recently, said the 37-year real estate veteran, there’s been a surge of requests for so-called broker price opinions, or appraisals that lenders often ask brokers to provide just before they put a foreclosed property on the market.
“I think it’s going to be a very big wave,” he said. “Just like what we saw through 2008.”
The effect on prices won’t be as severe, Abbott said, because values already have plunged and there’s hearty demand for such properties.
Still, he said, “It will keep prices low. . . . It’ll just slow the recovery down in general.”
Michael Chee, 43, of Burbank is among those worried about what a rise in foreclosures could mean for his home.
Chee was laid off from a healthcare consulting firm in March. With jobless benefits, he figures he will be able to hold on until he finds a new job. His three-bedroom house, though down 20% to 30% in value, isn’t underwater — for the present.
“We’re OK right now,” he said, noting that his brother’s home in Montebello is in foreclosure. “But going forward, who knows? The way things are going. . . .”
