Nearly half of SoCal sales are foreclosed homes

The region's housing market is increasingly dominated by sales of bank-owned, foreclosed houses, which made up almost half of the homes sold in August, according to MDA DataQuick's report on existing home sales. And despite the frenzy of foreclosure sales, banks are foreclosing on homes faster than they can sell them, according to Peter Hong's front-page story in today's L.A. Times:

So many foreclosed homes are for sale in Southern California that these distressed properties will soon dominate the market, forcing prices down even further.

About half the homes sold in the region in August had been repossessed, according to figures released Wednesday by the real estate tracking service MDA DataQuick, driving prices down 34% over the previous year to a median of $330,000.

... Regionwide, foreclosures climbed to 45.5% of sales in August, up from 10% a year ago. In hard-hit Riverside County, about two-thirds of previously owned houses sold last month were in foreclosure.

In L.A. and Orange counties, foreclosure sales make up a lower portion of overall sales -- roughly 33% in both counties.

MDA DataQuick reports that about 8,800 of the 19,366 homes sold in the region in August were in foreclosure; during the same period, according to Sean O'Toole of Foreclosure Radar, banks foreclosed on 12,900 homes in the region, effectively increasing the supply of bank-owned homes on the market.

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-- Peter Viles

Comments

[dude]

Interesting optimism piece by Jim Cramer. We are almost. February 2009 is his prediction. The video is long but worth watching.

http://www.msnbc.msn.com/id/21134540/vp/26762766#26754253

[sfvrealestate]

...And the other half are brand-new condos and townhouses.

[KateNonymous]

I'm not surprised. We've been looking at houses for months, and have seen no more than three or four that were regular sales because someone was buying a different house or moving. The vast, vast majority have been foreclosures or short sales.

I do wonder, though, what the variation is among different price ranges.

[Cal]

I wish LA Times came out with an article with this data for the LA area:

http://www.signonsandiego.com/news/metro/20080914-9999-1n14loss.html

I read somewhere else (have to find the link again) that short sales made up 9% of the closed sales. I think that number will grow to be an even more significant part of the market.

[NewtoLA]

Forclosures are clearly and indicator and driver of the drop in SoCal home values. Some have argued though that "higher" end areas are not affected by forclosures in distant towns/counties. Others argue that in order to get back to fundamentals all prices must come down at least 50% from peak in all areas. I'm wondering if any of you data wonks have assessed the historical relationship in prices between the high and low ends? So, are westside prices always 2.5 x the median or 3 x IE or any other stat that gives you this relative difference?

[Rational Renter]

Foreclosures happening faster than banks can sell them...that's all you need to know right there.

[Drew]

We're basically limiting our search to the REOs -- sine those are the only ones priced even somewhat reasonably.

The foreclosures that are priced reasonably are selling quickly, usually with multiple offers.

[anon1137]

I wish DQ would report the percent of sales going to investors. This is still a sick market, IMO, houses being bought and sold like pork bellies.

[Sharon Burton]

The PE in Riverside is reporting that essentially all sales in the IE are repos now.

And for those playing at home, comps for my home in Riverside have gone from 425k to 179k in 2.5 years. I'm now upside down, after carefully undermortgaging by 200k from the high. Because I knew it was too high.

This is, what, a 60%+ drop? How could I ever have expect/plan for that much of a fall?

[Rational Renter]

Sharon,
Not to rub salt in the wound, but since you asked: you could have seen this coming if you looked at the historical price-to-income data. Or compared the price of renting to owning in your area. Or looked at the recent price appreciation and extrapolated out just how long you thought that could go on and what would happen at the end...

[Sharon Burton]

Re rationalrenter:
I actually *did* the look affordablilty index, which is why I undermortgaged so much. I knew Riverside was going to fall, I just didn't see 60-70% as a "reasonable" adjustment.

I thought we would settle out at about 300k. Which is reasonable, remembering that most of Riverside works in OC for OC wages. The exchange rate is good. :-)

OC has always (last 15 years) been ~80-100K more for the average house, pushing people east. I figured OC would settle out at about 400k, which, given the lack of future home building land, seemed reasonable.

sigh.

[Eastsiiiide]

Curious if anyone knows the % of foreclosed sales in the West LA / Santa Monica area? Are those areas feeling the same kind of downward pressures because of foreclosures as well?