There is some short-term predictability to real estate.
Because foreclosures have a minimum 111-day notice period before becoming a trustee-sale candidate, we can check the foreclosure rolls and recent trends to anticipate the possible REO activity coming for the North SD County Coastal region.
Here is the historical pace of SFR trustee sales in NSDCC that went back-to-bene:
| Year | REOs | Avg-per-Mo. |
| 2007 | 137 | |
| 2008 | 257 | |
| 2009 | 284 | |
| 2010 YTD | 201 |
Here’s a chart below of the recent monthly totals – though the categories aren’t directly related, it can give you a feel for the current trends. It looks like fairly steady production, with some uptick lately – maybe some mid-summer banker vacations slowed things down a bit?
| Month | Back-to-Bene | New REO listings on MLS | MLS REO listings closed | ||||||||||||||||
| Apr | |||||||||||||||||||
| May | |||||||||||||||||||
| Jun | |||||||||||||||||||
| Jul | | Aug |
Sep MTD |
Totals |
Mo. Avg. |
|
The number of SFRs with active notices:
NOD = 253 (54% received their first notice in the last 60 days)
NOT = 365 (Only 28% received their original NOT notice in last 60 days)
Total = 618
The loan-modification candidates are among the 618, so we may not see them come to market for a while, if at all (some will stick). If half of the 618 defaulters actually hit the court house steps, and wound up going back-to-bene, it would mean that the current count would take about a year to liquidate – which seems like the same pace we’ll been seeing. It would take a change in the ‘delay-and-pray’ tactics being employed by servicers to change the course.
There have also been 553 cancellations this year too, which you would think were due to successful short sales. But in the MLS there have only been 151 short sales closed, and another 125 currently marked contingent or pending – which is only half of the cancellation total (though not every agent marks their listing in the ‘sales restrictions’ box, the MLS criteria used to count here). The banks/servicers might be letting a couple of hundred people float around for now?
REO listings vs Other detached listings that have closed since April 1st:
| Category | REO | Other |
| # of closings | 86 (7%) | 1,182 (93%) |
| Avg SP | $895,126 | $1,091,991 |
| Avg SP:LP | 99% | 96% |
| Avg $-per-sf | $302/sf | $383/sf |
| Avg DOM | 41 days | 67 days |
Trying to gauge how many buyers are left isn’t easy. But if banks/servicers decide to rush the exits, they would provide welcome relief for those trying to find attractively-priced inventory, and put a little pressure on the elective sellers who are currently happy to ignore 7% of the market. If the REOs doubled or tripled in North SD County Coastal, it would likely shake things up, with the biggest impact being on the elective sellers who wouldn’t be getting as lucky as they are now.
Jim, Have you seen any of this Title Problems/Wells REO Addendum? Buying REO may by risker that I thought.
jjm
Thanks, were you the one who sent me that last night?
Here’s the attorney’s opinion I got on it from Kingside, when I asked if it’s the same argument as the MERS debacle – I’m going to check tomorrow on his final question at bottom:
Yeah, this pretty much is the MERS thing. I guess I don’t see this as any sort of time bomb or major problem, at least in California. California has a very strong policy that supports the finality of trustee sales. If a borrower want to try to raise these kind of issues, they pretty much need to do it before the sale, and servicers can get slowed way down if the borrower files for bankruptcy before the sale as bankruptcy judges are much tougher on the standing issue. But while there can be delays, borrowers are not getting free properties just because the assignment chain isn’t perfect.
I am not aware of any title company in California that is refusing to issue policies on an REO sale, or trying to disclaim coverage based on who the owner is.
Wells Fargo is giving REO buyers grant deeds, right? Not quitclaim deeds. Grant deeds warrant title.
“Thanks, were you the one who sent me that last night?”
No I just ran across it this morning.
It sounds like California has a better handle on Foreclosure => REO than Florida (my state). If we have as much fraud as that article indicates it is going to be a mess for awhile.
I am big fan of your site. Thanks for all you do!
jjm
Thanks jim for your data and analysis. It seems NCC would have a big NOD/NOT inventory problem as long as they were not dumped in hurry.
“Trying to gauge how many buyers are left isn’t easy.”
^^I fully agree.
Another perspective: probably a large portion of potential buyer pool come from move-ups. This would make NCC market more dependent (or, less isolated as seen so far) on other San Diego areas. My uneducated guess: Those move-ups come from Clairmont, PQ, and RB/Poway.
Thank you for your hard work.
Correction: “would have a big NOD/NOT inventory problem” ==>”would not have a big NOD/NOT inventory problem”.
Did I read that right – the avg sales price for a non-REO (but presumably including short sales) is over $1M? I assume this was for SFR and did not include Oceanside, Vista, etc.