The SFR foreclosures around North SD County Coastal are still being trickled out, relatively.
We got teased with an increased flow in January when 49 got foreclosed, but in February that number was almost cut in half, down to 26 (with the same number of business days too).
Here are the foreclosed-SFR counts between Jan 1 and March 6th:
Town or Area
2009
2010
2011
Cardiff
4
5
5
Carlsbad
25
40
43
Carmel Vly
3
8
9
Del Mar
3
1
2
Encinitas
13
11
9
La Jolla
3
4
7
RSF
1
2
3
Solana Bch
4
7
3
Total
56
78
81
It’s mentioned in this video that buying a cheaper house with FHA financing might be of interest, but it is a novel concept with attractively-priced REOs. If you offered to purchase one of these with FHA financing, you’d get sent to the back of the line, behind the cash buyers, and those with big down paymnets:
A couple of years ago, one of the employees at RealtyTrac told me that they get their data from multiple sources, and they don’t have time to cross-reference or screen out any duplicates. Hat tip to Rob for sending this along – we’ve been hearing about how the NAR has been over-stating sales, here’s a guy who is comparing RealtyTrac’s numbers to the loacl county’s data. The result? It looks like RealtyTrac is reporting 3x the actual foreclosures last year in his county:
The number of foreclosure starts fell about 11.4% in January from a month earlier, but delinquency rates rose slightly because many lenders are moving loans out of foreclosure and back into the seriously delinquent category, according to Lender Processing Services.
The company’s most-recent Mortgage Monitor also shows foreclosure timelines continue to climb, with the average loan in foreclosure has been absent any payment for more than 500 days. Some 28% of loans in foreclosure haven’t had a payment in more than two years.
The loan-level database of LPS tracks more than 36.2 million mortgages. The Jacksonville, Fla., firm said there were about 230,000 foreclosure starts in January, which is down 20% from a year earlier. The delinquency rate rose less than 1% in January to 8.9% from the month before but is 18.8% lower than the nearly 11% rate recorded in January 2010, according to data from LPS Applied Analytics.
There are more than 6.9 million mortgage loans in arrears with about 4.3 million more than 90-days late or in foreclosure. In early February, analysts at both DBRS and Standard & Poor’ssaid the shadow inventory of distressed properties will push foreclosures to record levels in 2011.
While the volume of foreclosure starts continues to wane, the number of repeat foreclosures are becoming more frequent. Loans in foreclosure outnumber foreclosure sales 25 to one, although that is somewhat attributable to the moratoria enacted last fall in all 50 states. Foreclosure starts outpace sales almost three to one, according to LPS data.
The flow of North San Diego County foreclosures has picked up nicely.
Last year between January 1st and February 18th, there were 42 SFRs foreclosed, and this year there were 62, which is a 48% increase. Here’s a look at a few:
Sean, our Los Angeles correspondent, files this report:
Jim,
Up here in LA it looks like BofA/Countrywide just threw the foreclosure machine switch back to the “on” position. The number of Recontrust properties with opening bids set for tomorrow’s trustee sale auctions just spiked, so it looks like whatever self imposed delays or moratoria they had put in place during the past few months just came to an end. Let’s cross our fingers and hope that maybe last year’s misbegotten prediction that they would crank out 65k foreclosures is about to come true a year later.
Notice how people think that foreclosures automatically mean lower prices?
The pundits and mainstream media talk about a surge of foreclosures plunging us into the abyss; that prices would plummet.
Why? I don’t see any REO listings being given away around here, if anything they are going for retail, or retail-plus because servicers are marketing the REOs correctly. They clean them up, put an attractive price on them and make them easy to see. After letting them sit on the open market for a few days, they pick a winner. It is a very effective marketing strategy.
If servicers would foreclose on more properties in North SD County Coastal, creating more REO listings, three things would happen to help put more of a floor in the market:
1. They’d provide more well-priced inventory for waiting buyers.
2. They’d help convert lookers into buyers.
3. They’d create some certainty that we need not fear foreclosures.
There are 656 SFRs on the NOD and NOT lists in the North SD County Coastal region. If buyers saw some real market clearing they’d have more confidence that future foreclosures are a good thing. If the market was really hopping, it would put a scare into the deadbeats too, and maybe some of them would pay up.
Here’s a year-over-year comparion of the detached sales between Sept 1-to-Dec 31:
REO vs. Non-REO
# of sales
$$/sf
SP:LP
DOM
Average SP
Avg SF
2009 REO
86
$296/sf
101%
35
$820,863
2,960
2010 REO
57
$331/sf
98%
40
$878,168
2,851
2009 Non-REO
778
$411/sf
95%
85
$1,142,691
2,832
2010 Non-REO
706
$394/sf
96%
86
$1,181,358
3,084
The difference between REOs and Non-REOs is the quality of product. The servicers aren’t giving away houses for 10% to 20% less, rather they are stuck with the inferior homes that the owners wouldn’t fight to keep, or short sell. When they do list homes of better quality, they can’t underprice them – the marketing system ensures that they get bid up to retail, or higher, pricing.
The number of properties making it to the court house steps is on the rise – there has been a 50% increase roughly in SD County trustee-sales since the end of June (from 200 to 300). It’s still a pittance, however, compared to the 14,493 properties in default in San Diego County:
The SFR trustee sales in the North SD County Coastal region have been fairly steady however – no big spikes yet. There has been an average of seven SFRs foreclosed per week over the last 12 weeks (avg of 2 of 7 bought by third-parties), even though there are 608 on the NOD/NOT lists. Are servicers trying to squeak out every last loan mod they can find, or deliberately holding back?
North San Diego County Coastal Trustee-Sale Results, SFRs-only:
It appears that the servicers are managing the drip very carefully for the higher-end properties, but if there are any surges, you’ll see them here!
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.
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
Short-Sales
543 (20%)
$313,054
$197/sf
132
REO
605 (21%)
$281,311
$185/sf
46
Regular
1,675 (59%)
$483,559
$266/sf
70
North SD County Coastal (La Jolla to Carlsbad)
Seller
# of sales
Avg. Sales Price
$-per-sf
DOM
Short-Sales
39 (12%)
$540,000
$277/sf
94
REO
35 (10%)
$581,682
$307/sf
54
Regular
262 (78%)
$847,377
$362/sf
59
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.
These days, every time you read the news you’ll see another expert talking about the shadow inventory coming home to roost. Depending on the guesser, there will be somewhere between 3 million and 8 million homes that get foreclosed in America over the next 1-10 years. Can we narrow that down a bit?
The shadow inventory that is hardest to count are the borrowers who are not making their payments, but aren’t on the foreclosure rolls yet. LPS came out with this chart (below), so let’s use their numbers and envision what would happen if banks/servicers change course, and ramp up the foreclosure machine:
The chart shows 17,800 defaults (today the NOD and NOT count is 14,435 on foreclosureradar), and 34,200 properties in San Diego County that are at least 90-days late, for a total of 52,000.
How would it look in your area if EVERY ONE of these were foreclosed in next 12 months?
To estimate the total number of defaulters plus 90-day late borrowers for each area, let’s use the multiplier formula here: 17,800 x 2.92 = 52,000.
Let’s multiply 3x the current defaults in each area/zip code:
Area or Zip Code
NODs/NOTs x 3
# of Homes
1 REO per # homes
Foreclosed since 1/1/07
Spring Valley
783
9,368
12
1,777
West RB 92127
378
7,140
19
506
Chula Vista
3,051
59,529
20
6,675
Otay Mesa
825
17,197
21
1,807
Encanto
780
17,869
23
1,675
Escondido
1,605
44,964
28
3,934
El Cajon
1,068
35,173
33
2,652
Oceanside
1,698
59,498
35
3,962
RP 92129
348
15,109
43
487
Scripps Rch
222
10,521
47
288
Carmel Valley
237
11,304
48
291
Carlsbad
672
33,717
50
987
RSF
63
3,517
56
71
Cardiff
78
4,544
58
58
Encinitas
303
19,138
63
305
Solana Bch
81
6,072
75
102
La Jolla
246
19,529
79
257
PB/MB 92109
261
26,105
100
285
Del Mar
66
6,714
102
78
If servicers crack down and foreclose on every 90-day late property, we’ll see one flipper or REO listing on virtually every block in areas like Spring Valley. But with all the foreclosure activity over the last few years, would it bother buyers to see 1 out of 40 or 50 homes getting foreclosed? I don’t think so, and this is probably the worst-case scenario over the next year. The current SD default list is split 65% SFRs, and 35% condos/others, so spread it around as you visualize what might happen in your area over the next 12-18 months.
In areas like Carmel Valley, where we’re estimating 237 SFRs and condos on the NOD/NOT/90-day list, it would bring relief to buyers starved for well-priced inventory. We know some defaulters will get their loan mod or be short-sold, but if not, and 15-20 foreclosures per month came on the market, it wouldn’t overwhelm the market – 71 homes sold there last month. Hopefully, it might scare some of the elective sellers back to the sidelines, to be replaced by bank-owned inventory.
In Carlsbad, if you divide the current NOD/NOT/90-day list by 12, it would mean roughly 56 REO or flipper listings per month, and 124 sold there in August.
We’ve expected that we’d be in a heavy bank-inventory environment by now, yet the ‘delay-and-pray’ strategy has been employed instead. If 30% to 50% of the for-sale inventory was well-priced bank deals (flippers are retail-plus) it could boost sales. If servicers insist on the extend-and-pretend strategy, sales are going to slow down, unless elective sellers get more realistic.
Servicers, please foreclose on every defaulter in the next 12 months – homebuyers would appreciate the well-priced inventory!
