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SD Foreclosure Graphs

There has been a rebound lately in the number of weekly trustee sales resulting in REOs, but still relatively low numbers overall, compared to where we think they should be:

San Diego County Trustee-Sale Results, Weekly

Below is the quarterly chart for the last three years. Even though the foreclosure moratoriums are mostly expired, there haven’t been more properties getting foreclosed than in 2008 – but add in the cancellations and it looks to be about the same (or more) volume as 2-3 years ago. Are banks letting people off the hook, or did defaulters get their loan mod? Or were they just bluffing?

San Diego County Trustee-Sale Results, Quarterly

But you might be able to say that the servicers must be getting sharper on price, and/or the investors are getting more optimistic – the third-party purchases have gone up substantially since 2008.

SD Case-Shiller Up 10.8% YOY

The latest Case-Shiller/S&P report, the index measuring same-house sales, has the March numbers out today. They noted, “San Diego, in particular, has stood out with 11 consecutive months of increasing home prices.”

http://www.standardandpoors.com/spf/docs/case-shiller/CSHomePrice_Release_052506.pdf

San Diego was the only town in their top 20 that had all positives:

Period % Change
Jan-Feb
+0.6%
Feb-Mar
+1.5%
Y-O-Y
+10.8%

According to the MLS, year-over-year SD detached sales were lower in April, but there could have been many that dragged into May to catch the state tax-credit:

April # of Sales $$/sf SP:LP
2009
1,966
$215/sf 98%
2010
1,836
$250/sf 99%

If the banks/servicers keep the extend-pretend tour alive by postponing the vast majority of trustee sales, will the streak continue? Buyers are increasingly frustrated by the lack of quality inventory, and what appears to be relative stability in pricing.

Will buyers concede? It might depend on how the media portrays the May sales numbers. The tax credits haven’t caused Y-O-Y sales to improve during the May 1-15 period, though the late-reporters might make it a close race:

May 1-15 # of Sales $$/sf SP:LP
2008
763
$290/sf 96%
2009
970
$223/sf 99%
2010
875
$254/sf 99%

It was in March, 2009 that the stock market rebounded, and real estate did the same as mortgage rates dipped under 5% – reflected in the May, 2009 closings. Where do we go from here?

Prices Flat, For Now

From Lansner at the OC Register– and a novel concept; appraising the same houses:

Real Estate Research Council of Southern California has a most unusual home-valuation technique: Twice a year, the group gets volunteer appraisers to review the same, exact homes from the regional over and over again. The exercise — that adds an human eye to the great price debate — goes on every October and April.

The latest version is out (April’s), and the group — HQ’d at Cal Poly Pomona — found San Diego County values up 0.2% on a year-over-year basis.

Mello-Roos Squash

These new tracts in northeast Carlsbad seem to have decent pricing, with 1,753sf homes starting in the high-$400,000s on the lower end, and 3,000+ square footers in the mid $600,000s.

But even with the tax credits, they have only sold half of the homes released in the last two months, which should have been the hottest new-home-sales market in the history of the world. You can see it in their eyes, and hear it in their voices – the sales people are getting nervous:

RE Revolution? Not So Fast

Is there a real estate revolution available, beyond just a fancy new MLS website?

Zip Realty has blazed the trail.  They offer:

  1. Their own search website
  2. Rebates
  3. Phone Apps
  4. Salaries to agents
  5. Catchy name, and national exposure

Their website is of particular interest.  They mention:

Our ZAP technology also includes a customer relationship management system that identifies and analyzes user behavior on our website allowing us to provide more relevant information and service to clients and a business management system that allows our managers to monitor the activities of our ZipAgents to verify a high level of client service.

They monitor your usage of their website.  They track the houses you’ve viewed on-line, and how long you spend looking at each house – figuring the longer you look, the more you like it.  Then they send a report to your designated Zip agent.

It sounds a little creepy, but from the agent/broker perspective, it is a very effective way to identify the clients who are motivated, and keep the agents focused on productivity.

If you were thinking about how you might create more than just a fancy website, and wanted to change the business, you’d admire Zip’s model. Redfin is another company that publicly set out to revolutionize the business with a very popular website and rebates. How is it working in San Diego?

Agency # of SD agents 2010 Sales YTD
Zip
98
181
Redfin
18
31
JtR
2
26

Zip Realty started in 1999, so you’d think by now they would be gaining traction, but in 1Q10 they lost $6.2 million. Redfin is privately-held, but according to wiki they’ve poured $20 million of venture capital into their company.

Yet based on the number of sales, neither has been able to revolutionize the real estate world as we know it, at least not in San Diego. There have been 12,320 detached, attached and 2-4 unit sales in 2010, year-to-date.

Why? Because the more-experienced agents are able to beat the others to the punch – they recognize the best buys faster, their clients tend to be better qualified, and the respect/camaraderie between the veteran agents will trump the less-experienced agents in a close race.

Any revolution would have to embrace the more-experienced agents, or over-run them. A company like Google would have to set up an auction house with full transparency to topple the old guard.

P.S. I have never had a bad experience with any Zip or Redfin agents, and I mention my stats as a middle-of-the-road example – there are agents who sell a lot more houses than I do. Because it’s been mentioned here several times that the sales history of each agent should be out in the open to assist consumers with evaluating realtors, let it start with me.

The Big Convergence – Open MLS?

We’ve had some recent banter on previous posts about creating a public/open MLS website.  The idea has come up before – CA renter summed it up yesterday:

Jim and I have discussed this open MLS concept in the past, but it was difficult to come up with something that was so exceptional, everyone would want to use it right away.

When Zillow came out, I was hoping they would move in the direction of an open MLS, with all the relevant public information on the same site, but for some reason, they didn’t really run with the concept when they were fresh and everyone was looking for a new leader.

A new website just for searching properties for sale probably isn’t required – there are plenty of good ones available.  If the new website had bells and whistles not available elsewhere, like tax-roll data or realtor stats and reviews, it might provide enough extras that it could garner an audience. 

SDLookup offers a few bells and whistles, but they exist only because Sandicor has relied on realtors to provide their own MLS access for consumers via IDX (mine is in the top left corner above, called “Search for Homes”). 

If Sandicor or other realtor associations get their act together (new national and state-wide MLS efforts are underway currently) and provide the smoking hot public website for searching properties, they could dominate like realtor.com did when it first came out.

A state or national website would handle the searching component, is there more available?

In previous discussions we determined that the website would have to be available at no charge – because all the other real estate websites are free.  The effort required to create and maintain such a website, just to live off advertising, isn’t that appealing.  Sell it to a big player?  Sure, it sounds good, but they could beat us to the punch, or copy it.

What are other reasons that might make it worth it?

  1. Cut out extra agents/costs/fraud.
  2. Work within clear-cut guidelines, especially on short sales.
  3. Full transparency, including more direct interaction between buyers and sellers.

Whoa – that’s more than just a website, it sounds more like changing the real estate world!

Could a renegade brokerage take over a market, and change everything?  

A few years ago a company called I Pay One tried it, and failed – even though they spent a boatload of money advertising their 1% commission concept.   Their problem?  They didn’t embrace the realtor community.

What if a long-time broker (and part-time blogger) devised a solution, addressing all 3 items above, and was realtor-friendly too?  Is it possible to change the real estate world, as we know it?

The biggest deterrent is changing something that’s already working – it’s a good gig here already.

Let’s put some thought into it, what do you say?

4-Year Price Prediction: +15%

Thornberg hasn’t been a big cheerleader, so this report is curiousfrom the U-T:

County home prices, which began to recover last year, will continue rising but at a slowing pace as government stimulus programs expire, Beacon Economics forecasters predicted Friday.

In a wide-ranging review of the local economy at the San Diego Hilton Torrey Pines, the San Rafael consulting firm’s economists said single-family resale home prices will trend upward, from the first quarter’s median of $382,788 to $439,000 over the next four years — a nearly 15 percent rise.

“Home prices in San Diego are great news here,” said Brad Kemp, Beacon’s director of regional research.

But the recent increases occurred with the help of federal stimulus dollars, not because of any underlying economic fundamentals, such as significant job or population growth that would spark long-term demand, the economists said.

With foreclosures expected to increase, home-buying incentives expiring and nearly a third of all homes worth less than their mortgage balance, Kemp said sales and price growth will slow down. The $439,000 median price forecast for 2014 would still be 23 percent below the 2006 peak of $571,580.

“I don’t think it will grow at an exponential pace anytime soon,” he said.

The forecast falls in line with other economists and real estate industry analysts, who have predicted a leveling off of prices or a drop of as much as 5 percent for the rest of the year, after federal homebuyer tax credits and low interest rates end. An expected increase in foreclosure properties also is expected to keep a damper on prices.

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