Leg 1

Let’s designate a series of homes to watch so we can identify if there’s a significant leg down in the works, or just a bumpy ride through tract-ville.  Using newer tract homes for markers is the easiest way to gauge the trend, because of their similar nature. 

In the video below, you’ll see that there’s a 4,225sf REO coming to market, and the last two model-match sales were significantly higher than the opening bid – but both had $200,000 in upgrades, according to the MLS remarks.  If the REO is priced way under, will buyers come running?  If they don’t, it’ll look like a leg down just based on price only, but as you’ll see from the exterior, its sale could be hampered by the “features”:

Grain of Salt Needed

The TV pundits who make general statements about the real estate market (good and bad) aren’t helping those in need of accurate data for their specific area – get it locally. 

But the talking heads have the ability to influence, and in this video they actually have a few good things to say about the real estate market.  If the national stats can wobble along over the next few months, will pundits start talking it up?

Bubbleinfo’s 5th Anniversary

CA renter, a big supporter and blog commenter since the beginning of bubbleinfo.com was nice enough to sit down and talk real estate to celebrate today’s 5th anniversary.  I respect her desire for privacy, so you’re stuck looking at me a lot – sorry. She is a valued contributor because her comments on the blog are based on reality – she is sold at the peak, banked the money, and has been carefully looking to buy a home ever since….and is on the street searching regularly!

Thanks to all participants over the years!  Jim the Realtor

Bring ‘Em On

Reader “positive” said that ‘ghostfaceinvestah’, an MBS-trader who comments on Calculated Risk, trusts that LPS accurately reports the mortgage delinquencies and defaults data (I had mentioned my skepticism – Mark E., what do you think about LPS?). 

I did email LPS this morning to inquire about getting delinquency counts by zip code, but no response yet.  I asked others the same question a few months ago, and corelogic wanted $25,000 per month, and Experian never responded.

If LPS is the best resource, let’s examine their latest report, as seen in the REC:

According to Jacksonville-based Lender Processing Services’ (NYSE: LPS) latest First Look Mortgage Report, mortgage performance statistics derived from their database of nearly 40 million mortgage loans showed an acceleration of U.S. home loan delinquencies entering the foreclosure process in August 2010.

“The fact that we’re seeing foreclosure inventories rising is more a factor of process than increasing deterioration,” explains Herb Blecher, Senior Vice President of LPS Applied Analytics, “Loans that have been delinquent for a historically long period of time are just now beginning to move through the pipeline. As of July 2010, the average length of time a loan in foreclosure had been delinquent was nearly 470 days.”

Blecher further commented, “Now, after the intensive efforts of the last year or two, remaining home retention options appear to be exhausted and servicers are beginning to process more of these seriously delinquent loans.”

Orlando Realtor Tonya Giddens commented, “Given this country’s continued high unemployment rates coupled with the growing number of strategic defaults by families in many U.S. cities with negative home equity, these growing foreclosure numbers don’t surprise me anymore.”

LPS Report Highlights:

  • Total U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure): 9.22%
  • Month-over-month change in delinquency rate:  -1.0%
  • Year-over-year change in delinquency rate:  -5.1%
  • Total U.S foreclosure pre-sale inventory rate:  3.80%
  • Month-over-month change in foreclosure presale inventory rate:  1.5%
  • Year-over-year change in foreclosure presale inventory rate:  4.9%
  • Number of properties that are 30 or more days past due, not in foreclosure: (A) 4,947,000
  • Number of properties that are 90 or more days delinquent, not in foreclosure: 2,374,000
  • Number of properties in foreclosure pre-sale inventory: (B) 2,038,000
  • Number of properties that are 30 or more days delinquent or in foreclosure:  (A+B) 6,985,000
  • States with highest percentage of non-current* loans: FL, NV, MS, GA, IL
  • States with the lowest percentage of non-current* loans: MT, WY, AK, SD, ND

*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.

Distressed-Sales Count

Frank asked about the breakdown of REO/SS/regular-sellers:

SD County, August 2010, all property types

Seller # of sales Avg. Sales Price $-per-sf DOM
543 (20%)
605 (21%)
1,675 (59%)

North SD County Coastal (La Jolla to Carlsbad)

Seller # of sales Avg. Sales Price $-per-sf DOM
39 (12%)
35 (10%)
262 (78%)

Note that when a listing is marked contingent, the ‘days on market’ clock keeps ticking. It is only once it is marked pending that it stops – which enables the fraudulent sales to misrepresent the actual time on market. In other words, a listing agent can input a listing and immediately mark it contingent, then change it to pending 3 months later – and the DOM will show 90. Yet above the short-sale average DOM above is much longer than the others – it’s because some agents incorrectly mark their short-sales pending, instead of contingent, which runs up the DOM.

The Right To Rent

They are going to keep throwing everything at the wall, until something sticks. From HW:

In the wake of reform enacted to promote homeownership, analysts at the Center for Economic and Policy Research are saying that ownership may not be the smartest option.

In a report released today, The Gains from Right to Rent in 2010, the CEPR suggests that giving homeowners the right to rent their house at a fair market price could be a game changer in the nation’s foreclosure crisis.

The report dissects the benefits of a drafted bill, H.R. 5028, also known as The Right to Rent. Under the legislation, homeowners entering the foreclosure process would be able to occupy their homes for up to five years, while paying rent to a lender. Rent would be based on fair market price as determined by an independent appraiser and adjusted annually.

“This would give homeowners an important degree of security, since they could not simply be thrown out on the streets,” wrote Dean Baker and Hye Jin Rho, co-director of and research assistant at CEPR. “This policy should also benefit neighborhoods in the most hard-hit areas, since they would not have large numbers of vacant homes following foreclosures.”

The CEPR report, which compares the costs of owning a home and renting in 16 major metropolitan statistical areas around the U.S., found that homeowners would see substantial reductions in costs by becoming renters if they rented in a bubble-inflated market. Savings are much less, however, if the market was not affected by the housing bubble.

For example, in the Los Angeles MSA, homeowners would save $1,586 per month by becoming a tenant. The median home price in 2006 and 2007 was $608,600. Based on that number, CEPR found the monthly cost of ownership as $3,128 versus $1,420 to rent.

New York/New Jersey, Sacramento, San Diego and San Francisco savings are all over $1,000.

Existing-Home Sales, August

The N.A.R. will be releasing the existing-home sales number tomorrow, and a rout is expected.

The consensus is that August sales improved over July’s number, but they think the year-over-year stats could plunge. The press will focus on any negativity, and call it catastrophic.

Lately there have been numerous reports that the shadow inventory is somewhere between 3 to 8 million homes, but after so many people say it, the impact has become muted. Can we sex those up a bit? 

I think soon (any day now) we are going to hear an eight-figure estimate from one of these so-called “experts’ – that the shadow inventory is OVER 10 MILLION HOMES!  Because there is no way of knowing the exact count, why not?

It’ll likely come from Rick at RealtyTrac, and it’ll be the new scare.

If the motivated sellers bite, and dump on price to salvage what they can before the headlines get any worse, it’ll be great for buyers.

Here are the SD County MLS sales numbers and percentage changes for August, all property types:

Month # of Sales $-per-sf DOM
Aug 2009
Jul 2010
Aug 2010

Sales: Month-over-Month = +1%, Year-over-Year = -4%
Pricing: Month-over-Month = -1%, Year-over-Year = +3%


North SD County Coastal (La Jolla to Carlsbad)

Month # of Sales $-per-sf DOM
Aug 2009
Jul 2010
Aug 2010

Sales: Month-over-Month = -4%, Year-over-Year = -5%
Pricing: Month-over-Month = +1%, Year-over-Year = -4%

I’m going to go out on a limb and guess that our percentage stats will be better than America’s.

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