Two thoughts worth exploring:
1. Is there any evidence of the foreclosure flood hitting the MLS yet?
2. How are regular sellers faring, compared to REO listings?
Currently the new REO listings are about 20% of the total new listings coming on the MLS. Last month there were 855 REOs sold, or 32% of the 2,659 closed sales.
So the majority of sales are non-REOs today, but as more enter the market, buyers will gravitate towards them because of the notion they are giveaway-priced just because they are bank deals.
SD County New Total Listings, and Number of Them Already Marked Pending:
| 7-Day Period | All REOs Listed/# PEND | Effective % | Non-REOs Listed/# PEND | Effective % | 7/31-8/6 |
| 8/7-8/13 | ||||
| 8/14-8/20 | ||||
| 8/21-8/27 | ||||
| 8/28-9/3 | ||||
| Total |
The 602 REO pendings over the last five weeks is only 28% of the total new pendings, but the banks are more effective with their pricing (62% vs. 37%). With REO listings expected to increase dramatically, and regular sellers cancelling their listings for the holidays, don’t be surprised if we see the number of REO sales increase to 50% to 60% of all sales by the end of the year.
Once the REOs make up the bulk of the sales, it will be very hard for regular sellers to compete – the buyers want to steal one from the bank! Look for 2010 to be the year of the Bank Deals!
The banks are learning so what didn’t sell before this November will be sold in Spring 2010. Couple that with the existing supply chain of soon to be REO or REO and the economy, prices will have to drop. I hope they don’t because I don’t want any renters near me.
Maybe you’ll get lucky 3clicks and flippers instead of cashflownians will swoop in on your neighborhood.
Thank god for TARP or banks would have to sell properties at the market rate.
i wonder of those non-REOs are flips of houses that were REOs not to long ago.
Having made offers on REO’s I know listing prices don’t mean squat if the property is anything close to being special. The bank may not know it is special or desireable but buyers will bid the thing UP(or down) if BPO is out of whack. 1659 Milan Way REO in SEH listed at about $564, I put in bid at $575 w/in days of listing and lost out to a $605 winning bid. So, just because the banks try to “give away” homes at “firesale” prices it doesn’t mean you will get the house you want at the “firesale “price. You are more likely to get a “deal” w/ an REO as a fixer upper or something next to a busy street so less competition.
@John, was 1659 Milan purchased as a flip and is it in good condition? $181 per sq ft is not a bad price for a 3,334 sq ft, 4 br, 3 ba house. You do know that property taxes include $3K for the voter approved bonds in SEH and there is also a pretty expensive HOA fee in that area too. I know, because I have colleagues who purchased in that development in 2005 for 850K – same floor plan/model. SEH 25% – 30% price drop since the bubble. Where Encinitas = 12 – 15%. What makes this more palatable for me is that I bought a smaller home in a nice zip code in a more established neighborhood. However, in my development there have been three REOs since the peak. 2 of 3 were purchased by families who are staying long term and the other REO is in escrow as of last month. A forth (non REO) house was sold (600K) last year and purchased by a couple who either tried to flip or wanted to live long term, but they still had their other house, but they ended up renting out the new home through a property management company. Checking the tax rolls, they only have the rental as their sole property now so not sure what is going on. I think rent in this ‘hood is between $2300 – 2500 per mos and if they didn’t put at least 250K – 300K down they have to be short $500 – $800 a month – not sure the cost to hire a PM company. It is going to be a long time for that house to sell for the same price they purchased it for in 08. I HOPE I AM WRONG THOUGH ;D
I hope they don’t because I don’t want any renters near me.
We’re coming to get you, 3clicks! 😉
Seriously, if REOs are 50-60% of the market then they’ll be setting the comps for sure. WOOHOO!
3clicks, I don’t know it 1659 Milan was purchased by flippers, all I know is some folks seem to think listing prices set comps and since REO’s often list lower than market more REO’s must mean lower comps. Not exactly true if CLOSES are higher than lists and also, just becuase something lists for x amount, it doesn’t mean you will get it for x amount. There look to be 2 REO’s coming down the pike on Stargaze in SEH with nice views and if they list for 169/sq foot like that one on Milan listed for I bet anyone that list won’t be setting the comps at 169/sq foot unless the world goes under in the meantime.
Which is exactly why foreclosures are **market priced** sales.
It’s funny when the MSM/Realtors claim that prices of foreclosures should not be counted because they are somehow “below market price.” Not true, as buyers will always bid up properties to their market value, as long as the house gets proper exposure (must be listed in the MLS), and is available for at least two weeks.
I’m talking about those renters with nefarious behavior. Any of you guys are OK so as long as you don’t take up the empty parking space in front of my place that I never use 😀 I have heard of and seen many neighborly battles in Cardiff by the Sea where parking is a premium.
If I sound angry I am sorry but that’s just my frustration coming to the fore as a buyer in what is supposedly a buyers market. It’s hard to watch the nice-home at good price short sales go contingent w/in hours of listing, the good REO’s get bid up and then when you do the unthinkable and offer OVER list you still lose out.
Things could be worse. You could have over bid in 2006. I don’t know where you are looking to buy, but I wouldn’t sweat it. Look to buy in Dec – January. Someone will have to sell and most aren’t looking. You don’t necessarily have to buy REO.
“as a buyer in what is supposedly a buyers market”
It has not been a buyer’s market in certain areas and price ranges in San Diego for some time now. Not enough well priced houses to go around.
Hopefully, that will change if more foreclosures come to market. The banks won’t let people live in houses for free, forever, right? Anyway prices have come down quite a bit from peak and they’ll probably fall futher.
It’s hard to watch the nice-home at good price short sales go contingent w/in hours of listing, the good REO’s get bid up and then when you do the unthinkable and offer OVER list you still lose out.
Damned if that doesn’t sound (echo) bubblish.
You mean, doublebubble-ish.
I’m a frustrated buyer too. But I think until the FHA implodes, there’s going to be too much funny money chasing anything good under $750,000.
Jim or anyone, what is up w/ 2771 Palmetto listed and pending same day, claims not short sale or REO.
I’m pretty set on looking for something in SEH, but
for this price and that nice yard in decent location I would’ve be more than happy to live there instead.
oops thats 2771 Palmetto in Carlsbad
http://www.sdlookup.com/MLS-090050779-2771_Palmetto_Dr_Carlsbad_CA_92009
triplebubble.com and triplebubbleinfo.com are available.
Have to retract that last comment a little bit… I did find one beautiful home under $750,000.
Good one WC. I ride by that house 3x a week and I have been wondering what the frick is going. I have a colleague who bought a few miles south on the frontage road with intent to flip in ’06. That was when the list to sell price ratios were dropping steadily from the previous year (even when you take seasonality out of the equation) and DOM were getting longer. On top of that, the noise from Hwy 5 is insane. She said, well if I close the door the sound is gone. Well, their down payment is gone and they are renting the property out at a loss. My advice would be to sell and take the loss because I don’t see how they will ever make it up. That is after the 60K in updates on a house that should have never sold at $700K located 100 ft from the freeway with a chain link fence as the retaining wall.
V.C.,
Note that they bought that property to flip — $550K in April of 2008. I remember looking at it (even drove by and walked the property when it was on the market in early 2008), and thinking that anyone who bought it for $550K was nuts. Then, they tried to flip it for $699K after they bought!!!
I’m a bit surprised the one on Devonshire hasn’t sold yet. With all the eager buyers lately, it seems to have slipped under their radar. Again, we took a look at it, and the freeway noise is quite bad. Still, it’s a better deal than the tear-down with boarded-up windows, IMHO.