We saw how pricing was lower with short-sales vs. non-short-sales, but how many short sales are there in North SD County’s Coastal region?
Either way (including the closed sales from the last three months or not), short sales are making up around 15% of the overall detached-home market in NSDCC:
MLS Status
Short Sales
Non-SS
Actives
49
1,208
Contingents
228
43
Pendings
74
623
Soldslast90days
155
1,044
Totals
506
2,918
Short sales are 31% of the contingent+pendings, which should nicely supplement the closed-sale counts for the rest of the year – though if they continue to sell at lower prices, they will be a contributing factor to what could appear to be a pricing slump in 4Q12.
He mentions the inventory shortage as a cause, but buyers’ internet efficiency is playing a role too – they are able to carefully track the good buys, and act promptly. From Nick at thewsj.com:
A shortage of inventory is having a dramatic effect on home sales in several Western U.S. housing markets.
Data from Redfin, the Seattle-based real-estate brokerage with operations in 19 markets, show that nearly 28% of homes listed in their markets in August had gone under contract in their first two weeks on the market. The share has held steady since March, when it shot up from around 17% of all homes last year.
But a look at specific market data show heavy variation. In short, the West is on fire. The Northeast? Not so much.
In San Jose, Calif., for example, more than 52% of all new listings in August went under contract in 14 days or less. Other cities with a higher share of briskly selling listings include San Francisco (46%); Ventura, Calif. (44%); San Diego (41%); Los Angeles (40%); Seattle (34%); Denver (33%) and Phoenix (32%).
One notable exception to this list of Western standouts: just 8.4% of new listings in Sacramento went to contract within two weeks in August.
Markets in other parts of the country, particularly the Northeast, saw less aggressive activity. Fewer than 10% of listings in Chicago, 6% in New York’s Long Island, and 4% in Boston had a contract within two weeks. Homes are moving quickly in Washington, D.C., which nearly one-third of homes under contract within two weeks of their debut.
The figures track closely with those markets that have seen large declines in homes for sale. As we noted on Tuesday, many California metros have witnessed sharp inventory drops over the past year.
Sales are also going more quickly in markets that have witnessed some of the greatest price declines. Many markets in the Northeast have had less severe price drops.
An excerpt on housing from the latest UCLA Anderson Forecast:
In his September forecast, UCLA Anderson Forecast Senior Economist David Shulman labels current conditions in the United States as “the muddle-through economy,” noting that the economy continues to limp along at a very sluggish pace, as it has since the low point of the “Great Recession” in mid-2009. Shulman notes that real GDP growth has been in the 1-3 percent channel and is now operating at the lower end of that range.
Shulman says this tepid growth, combined with a structural adjustment in the economy, has caused employment gains to be modest, resulting in an unemployment rate above 8 percent for three and a half years.
“Simply put, job growth on the order of 160,000 a month in 2013 will not be sufficient to make any real dent in the unemployment rate. However, as job growth accelerates to 200,000 a month in 2014, the unemployment rate will begin to meaningfully improve,” writes Shulman.
Shulman’s optimism about 2013 and 2014 is buoyed by what he calls “the lone bright spot in the economy,” the long awaited rebound in housing construction.
“Led by multifamily construction, housing starts are ramping up from 612,000 units in 2011 to 763,000 units this year and just under 1 million units in 2013,” Shulman said. “By 2014, we anticipate that housing starts will be in excess of 1.3 million units (and) the growth in housing will account for about a full percentage point in GDP growth by 2014.”
Shulman says the strength in housing is underpinned by gradually rising home prices, record low mortgage rates, improved household formations and modest employment growth.
On the flipside, Shulman warns that if Congress and the president fail to agree on an end-of-year compromise on taxes and spending, the economy could fall off the “fiscal cliff,” leading to a downturn in 2013.
In a companion essay to the two forecast reports, UCLA Anderson Economist William Yu discussed economic conditions in China. In an essay titled, “The End of China’s Economic Marvel,” Yu said that a prognostication the forecast made last December about China’s economy has proven true.
“We predicted that China would experience a ‘hard landing’ and expect that it will be worse than the free fall in the 2008 financial crisis because their stimulus medicine will not work this time.”
Yu anticipates that China’s economic hard landing will be ongoing through 2013 and that China’s three-decades-long period of rapid growth will end in 2012. Yu explains that the structural change in China’s economic growth was both natural and inevitable; that if China continues its current investment spree, it will delay, but exacerbate, the hard landing in 2013 and 2014; that growth in Chinese consumption is the key to avoiding long-term stagnation; and that China’s GDP growth decline from 10 percent to 5 percent will result in a growth reduction in U.S. GDP of only 0.2 percent.
This chart makes it looks like foreclosures are on the rise lately, but don’t be too impressed – these monthly foreclosure counts are half of what they were two years ago.
There are still 10,504 properties on the NOD and NOT lists in San Diego County, and of the 193 that were on yesterday’s trustee-sale list, only 15 were actually foreclosed. Interestingly, only 23 were cancelled; the other 155 (80%) were postponed:
Borrowers will likely stay current on their mortgage after a principal write-down whether they share future equity returns with the bank or not, according to new shared appreciation program data.
Select borrowers can receive a principal reduction from Ocwen Financial Corp., but those back above water over three years but must agree to share 25% of the appreciated value after that time through a program the subprime servicer launched last summer.
Roughly 12.6% of the roughly 20,000 borrowers who took advantage of the program redefaulted within 12 months according to a report Morningstar Credit Ratings released this week.
That is above the 10% redefault rate for Home Affordable Modification Program workouts, but below the nearly 16% rate on private modifications.
A report this summer from Laurie Goodman at Amherst Securities showed borrowers who received a principal reduction in 2011 redefaulted at a 12% rate within in the first 12 months.
That’s right on par with Ocwen’s program, and the bank or investor gets some of the equity back.
Ocwen has faced much criticism from community groups and borrowers after the foreclosure crisis struck. Just 853 of its more than 5,000 employees live in the U.S. with the rest in India and Uruguay, and many borrowers complain of paperwork labyrinths and call center runarounds.
You keep hearing that banks and servicers have changed course, and are pushing defaulters to short sale, rather than face foreclosure. It’s been backed with the common belief that short sales cost less for the lender, and save the borrowers’ credit.
Does the new commitment to short sales appear in the stats? Banks did close 32% more short sales this summer vs. the June-August period last year. But as you can see below, it looks like they just stepped up production to the next plateau, instead of creating a whole new machine.
There are 3,527 short-sale listings marked ‘contingent’ in San Diego, which are those waiting for lender approval. Most will probably be approved slowly over the next few months, helping to bolster the year-end stats and make the 4th quarter market look stronger than it really was.
How does short-sale pricing compare to the non-short-sale pricing?
If it weren’t for short-sales, statistical increases in pricing would be more obvious.
If bankers were serious about market recovery, then they should cancel this insane pandering to defaulters. It would encourage the honest bill-paying folks, and help clean the bums out of the realtor community. Instead, short sales are just the latest can-kicking device!
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