Foreclosed: How big is the discount?

How deep is the discount on foreclosed houses right now? I ran some numbers on six houses and found discounts ranging from 16.6% to 41%. You can see the houses, with listing descriptions and listing prices, here.

What do I mean by discount? The decline from peak sales price to current asking price. I know, I know, most of these things sell for below the ask. So the "discount" will ultimately be greater. But this is a starting point, a way to provide information about current listings in relation to past sales prices.

Pictured at left: 1828 S. Manhattan Place, Los Angeles 90019, a duplex. Sold for $680,000 in May 2006, according to Zillow.com, now listed for $579,500. Nominal discount: 17.2% from peak price.

Your thoughts? Comments? Tell me your favorite sites to search foreclosure listings. E-mail story tips to peter.viles@latimes.com.
Photo Credit: David Silverstein

Comments

[x-man]

For release:
Monday, Feb. 25, 2008

C.A.R. reports sales decrease 29.8 percent, median home price falls 21.9 percent

LOS ANGELES (Feb. 25) – Home sales decreased 29.8 percent in January in California compared with the same period a year ago, while the median price of an existing home fell 21.9 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

“This most recent decrease in the median price is yet another result of the liquidity crunch, which has choked off sales in recent months for nearly half of California’s housing market," said C.A.R. President William E. Brown. "Sales do appear to be edging up, but recent declines in the median price have been due to a lack of sales in the over $500,000 range, where funds are extremely scarce and jumbo loan rates are at near-record margins compared to conforming loan rates.”

Closed escrow sales of existing, single-family detached homes in California totaled 313,580 in January at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity decreased 29.8 percent from the 446,820 sales pace recorded in January 2007.

The statewide sales figure represents what the total number of homes sold during 2008 would be if sales maintained the January pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during January 2008 was $430,370, a 21.9 percent decrease from the $551,220 median for January 2007, C.A.R. reported. The January 2008 median price fell 9.7 percent compared with December’s revised $476,380 median price.

“The slight increase in sales predates the president's signing of an economic stimulus package including a temporary increase in the conforming loan limit, but that much needed reform could give the market some momentum,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “Let's hope congress and the president see fit to make the higher loan limit permanent.”

Highlights of C.A.R.’s resale housing figures for January 2008:

*
o C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in January 2008 was 16.8 months, compared with 7.6 months for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
o Thirty-year fixed-mortgage interest rates averaged 5.76 percent during January 2008, compared with 6.22 percent in January 2007, according to Freddie Mac. Adjustable-mortgage interest rates averaged 5.23 percent in January 2008, compared with 5.47 percent in January 2007.
o The median number of days it took to sell a single-family home was 71.6 days in January 2008, compared with 68.7 for the same period a year ago.

Regional MLS sales and price information is contained in the tables that accompany this press release. Regional sales data are not adjusted to account for seasonal factors that can influence home sales. The MLS median price and sales data for detached homes are generated from a survey of more than 90 associations of REALTORS® throughout the state. MLS median price and sales data for condominiums are based on a survey of more than 60 associations. The median price for both detached homes and condominiums represents closed escrow sales.

In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 6.3 percent, or 16 out of 253 cities and communities, showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information. DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. (The top 10 lists are generated for incorporated cities with a minimum of 30 recorded sales in the month.)

Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for January may be exaggerated due to compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are accessible through C.A.R. Online at http://www.car.org/index.php?id=MzgyOTM=.

* Statewide, the 10 cities and communities with the highest median home prices in California during January 2008 were: Newport Beach, $1,250,000; Danville, $1,037,000; San Clemente, $923,500; Santa Barbara, $895,000; Yorba Linda, $807,500; Redondo Beach, $800,100; Redwood City, $757,500; San Ramon, $753,500; San Francisco, $744,500; and Sunnyvale, $708,500.

* Statewide, the 10 cities and communities with the greatest median home price increases in January 2008 compared with the same period a year ago were: Redondo Beach, 11.1 percent; Danville, 6.9 percent; San Diego, 5.2 percent; Arcadia, 4.2 percent; San Clemente, 2 percent; Los Angeles, 1.5 percent; Sunnyvale, 1.2 percent; Walnut Creek, 0.8 percent; Thousand Oaks, 0.4 percent; and Redwood City, 0.3 percent.

Leading the way...® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with about 200,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

January 2008 Regional Sales and Price Activity*

Regional and Condo Sales Data Not Seasonally Adjusted

Median
Price Percent
Change
in Price
from
Prior
Month Percent
Change
in Price
from
Prior
Year Percent Change
in Sales
from
Prior
Month Percent Change
in Sales
from
Prior
Year

Jan-08

Dec-07

Jan-07

Dec-07

Jan-07

Statewide

Calif. (sf)

$430,370

-9.7%

-21.9%

5.2%

-29.8%

Calif. (condo)

$370,260

-5.1%

-12.1%

-23.1%

-38.6%

Region

Central Valley

NA

NA

NA

NA

NA

High Desert

$234,310

-4.1%

-26.2%

-4.8%

-38.9%

Los Angeles

$469,420

-3.9%

-18.4%

-0.2%

-38.1%

Monterey Region

$580,560

-12.3%

-17.0%

-8.3%

-30.7%

Monterey County

$505,000

-13.6%

-23.9%

-5.9%

-23.2%

Santa Cruz County

$606,000

-17.2%

-15.2%

-11.5%

-38.9%

Northern California

$340,170

-3.9%

-10.8%

-11.4%

-5.8%

Northern Wine Country

$490,180

2.0%

-16.5%

-8.9%

-33.8%

Orange County

$609,030

-4.6%

-11.6%

-30.3%

-38.3%

Palm Springs/Lower Desert

$319,440

-12.4%

-8.4%

-0.6%

-15.3%

Riverside/San Bernardino

$298,010

-8.5%

-25.4%

11.8%

-18.5%

Sacramento

$258,230

-9.4%

-28.3%

-8.4%

-4.9%

San Diego

$482,420

-2.6%

-17.1%

-10.9%

-20.4%

San Francisco Bay

$691,390

-4.6%

-3.9%

-29.0%

-39.3%

San Luis Obispo

$531,250

0.7%

-6.6%

-8.7%

-28.2%

Santa Barbara County

$430,000

-12.8%

-46.5%

-4.0%

-5.9%

Santa Barbara South Coast

$1,135,000

22.7%

-1.3%

-10.9%

-31.7%

North Santa Barbara County

$291,180

-10.1%

-29.7%

0.0%

28.6%

Santa Clara

$750,000

-6.3%

1.4%

-29.6%

-42.9%

Ventura

$590,380

-2.4%

-11.1%

-21.7%

-38.3%

[debrap53]

Wow. I am ready to buy as soon as several of these dumps get under $150k.

[pugtv]

Lefty,

Is this where you live? What's up with the gates? lol.

[left of lefty]

i agree with peter. there is definitely a discount on reo properties right now. not only are they listed at a discount from 'peak', but also at a discount to similar homes on the market. do any search, sort by price from low to high, and the first few results are almost always reo.

offer another 10-20% off the list, and you've got your 20-40% discount.

but you would need to spend some money cleaning them up. skeletons are rare. usually it's just recarpet and repaint.

don't bother with non-reos and short sale properties. let them go into foreclosure, and you'll be able to pick them up for a discount in six months or so.

[SReno]

It's getting bad, just got my HELOC cut off letter from B of A today. Reads: Declining value...Blah Blah Blah..suspending your equity line. I wonder how many people have lost their HELOC.

[IE]

If you want a REO at 40% off quit looking in LA or OC, and start looking at the high desert and/or S Riverside County. Tons of deals in areas with lots of recent development. LA goes back 100 years, not very many distressed properties that were bought for 20k in 1980.

[markl]

not one of those homes is worthy of more than a 250k and most of them are not worth more than 150k.Bad areas,dumpy property.It goes to show you how insane the market was and still is when people are asking 400-600k for such junk.
The housing market will readjust down at least 50% from current prices and i would say more likely 65%.
This mania and its prices were given the same justification as the internet bubble.That market dropped 80% from peak.I see no reason why it wont fall as much in housing.I wouldnt dare try to catch a falling knife here.
The time to buy after a decimation is when prices start going up.Guessing the exact bottom is a fools game.
If anybody thinks this market will bottom at just a 20 % drop from mania peak they are delusional.

[lefty]

you know people, REO list prices are not always on target; do your own value checks and good agents like mr. nordine will do what they can! so make your move into gorgeous metro L.A. now, before the 'new jumbo loan' rush!!

[E]

The banks are still sitting on the "good" stuff.

they are heavily discounting the less desirable properties.

here are a couple from BMIT

http://redfin.com/stingray/do/printable-listing?listing-
id=1484819

http://redfin.com/stingray/do/printable-listing?listing-
id=1476497

[jb]

I think there was a shooting/murder not far from there the other day. 579 and 680 are the same number to me - fantasy pricing for crack-heads. Luckily, there is a steady supply of crack nearby.

[spinsLPs]

Per the MLS listing for 1151 LAVETA TER:

"There may be foundation and or retaining wall issues."

Sounds like a deal to me.

[formerlahomeowner]

20-40% discount? From what basis? Bubblicious prices! If a household earns ~ $100K a year, they would not consider living in these gang-infested areas and risk harm to their person or family members.

Lefty, make sure you bring 20% down, an AK-47 and a kevlar vest. Don't forget an extra generator to electrify those iron gates.

[Geek Seek]

With the foreclosures, we're getting closures. The valley lost a large part of it's heart for some people a couple of years ago when Dutton's Books in the Valley closed. Now the Brentwood store is set to close in April. http://tinyurl.com/2rg9gy

Weird twist -- Warren Buffett's partner, Munger is the guy that owns the site. He has apparently been very conciliatory and tried to find a way to keep the store going during redevelopment, but it's not to be.

It's been asked before, but would we really rather save 20% at amazon than be able to walk into a store, say hi to someone we know, and know that in 5 years we'll probably be able to do the same thing? The answer again and again in reality, is yes. Ech. We're foreclosing on ourselves.

[Michael Snyder]

"Investorguy" would offer no more than $250,000.

[PREFAB SPROUT]

Markl says in his post that none of these houses are worth $250K? I would happily pay that for the house on Wonderland! It's just down the street from Koenigs Case Study 21 house and in a nice area.....

[Just Call Me Maria]

1800 S. Bronson is not too far from my much beloved former house. It is right around the corner from the brand new library and a few steps from the middle school. The neighborhood isn't what I would call gang-infested, but it is transitional. Lots of hard-working people and their families. 1800 S. Bronson had some nice work done on the exterior- I wonder if the finishes were as nice on the interior?

[brad]

I'm tempted to stop reading this blog. Most of you folks do not have a clue. It was funny for awhile but I need to get on with my life. Maybe you all should to.

[TakeFive]

17.2% = 82.8% of original value

$680,000 x .828 = $563,040

14.72% = 85.28% of orignal value

$680,000 x .8528 = $579,900

---------------------------------------
Actual decline is closer to 14.7%
---------------------------------------

[Inland Empire]

IE says:
If you want a REO at 40% off quit looking in LA or OC, and start looking at the high desert and/or S Riverside County. Tons of deals in areas with lots of recent development. LA goes back 100 years, not very many distressed properties that were bought for 20k in 1980.

HEY! GET YOUR OWN HANDLE ON THIS BLOG!

[Macsco]

Just read this on a Harvard prof's blog:

"Remarkably, bankruptcy laws currently provide that almost every form of property (including business property, vacation homes and those owned for rental) except an individual’s principal residence cannot be repossessed if an individual has a suitable court-approved bankruptcy plan. The rationale is the prevention of costly and inefficient liquidations. It is hard to see why similar protections should not be prudently extended to family homes...."

So...just move out of your home temporarily and rent it out, then declare bankruptcy and move back in...hmmm

[Tim]

The market is funny in Los Angeles and I think some of you are going to be very disappointed in the end-results. For example, in Larchmont Village, every home that has gone on the market in the last few months has sold for close to asking or the asking price. Most homes are not staying on the market for more than a couple of weeks. The demand for historical homes in a central location has been very strong. In fact, the prices are higher than 2006 levels. It's a simple rule of "supply and demand". There is no supply in the area and a strong demand. This is the fact and until this changes, prices will not fall. This is true with other neighborhoods as well (the opposite can be applied elsewhere as well)

The lesson here? Don't expect "65% discounts" throughout Los Angeles. Every area is responding differently to this down market. Remember, this wasn't a normal bubble that got us here and I don't think all the normal rules are going to apply.

I think everyone is going to have to measure the impace neighborhood to neighborhood. Remember, most of the forclosures are not happening in the best neighborhoods (this is a fact -- look at the stats) If you want to live in San Bernandino, Riverside, Palmdale, Lancaster or South Central, you're chances for nabbing a foreclosure are much higher.

[areles]

Off topic but not really, http://www.californiamoves.com now allows you to search specifically for bank-owned homes. I've used this site for two years, and that option is new.

Sign of the times, I suppose.

[areles]

Here's an interesting case. Property at 316 Monrovia in Long Beach, 90803 is a foreclosure with a sale pending for 819K.

Recent sale data on this home indicates it was last sold in 10/07 for 780K.

So the house went into foreclosure mere months after being sold (last sale prior to that was for $300K and change, back in '97), and now the bank has made a profit?

Am I missing something?

http://www.californiamoves.com/property/
propertydetails.aspx?propertyguid=95974
ccc-7c16-41d7-ada9-487a5e3e902e&sqft=0&Street=
&mls=&CityIDList=c2410&MaxPrice=999999000&MinBed
=3&PType=SFAM&sortord=A&CountyIDList=&Community
IDList=&thumbs=1&qstext=long+beach&Zip=&MinPrice=
0&sort1=listprice&PropSearch=10&rpp=10&MinBath=
2&page=7

http://www.zillow.com/HomeInfo.htm?zprop=21219564

[Geek Seek]

Areles,

The buyers did a "Zestimate" no doubt, saw that it was, cough, worth $1.1M and snapped it up like a doggy treat. Zillow notes that the area is appreciating. Ah, Zillow... you might be more responsible for propping up values than every well intentioned bail out plan.

[Ace]

areles 'Here's an interesting case. Property at 316 Monrovia in Long Beach, 90803 is a foreclosure with a sale pending for 819K.'

areles, you have a lot of bad data. First, it was the bank that paid $780k to buy their house back in the foreclosure. That $780k does not reflect the house's actual value.

The house was foreclosed upon after it was purchased in 2005. There is no purchase price for some reason but there was a first mortgage taken out for $750k so I'm going to guess the house was purchased for around one million.

Also, when a house has a sale pending, the price is not updated. Someone could have paid $500k for that house. The price wont update until escrow closes.