Sales of non-foreclosed homes still dropping

Here's another take on yesterday's MDA DataQuick numbers showing a 65% spike in Southern California home sales in September: sales of houses that have not been in foreclosure actually fell from year-ago levels and are likely at their lowest levels in recent history.

In other words, there are two distinct housing markets in the region right now: the market for previously foreclosed houses, which is booming, and the market for non-foreclosed houses, which is arguably slower than ever before.

Numbers, from MDA DataQuick: In September 2007, 12,455 existing homes sold in the region; Of those, 12.6%, or 1,569, had been previously foreclosed on, and 10,886 were not foreclosures. In September 2008, 20,497 homes sold and split was 50-50 -- 10,248 previously foreclosed homes and the same number of never-foreclosed homes.

Now do the math: Sales of previously foreclosed homes spiked 553% in the past year; sales of non-foreclosures fell by 5.8% in the same time period.

DataQuick called the September 2007 sales level "pitifully low," the lowest level of sales it had measured in any September in 20 years. And in the non-foreclosure market, September 2008 sales were even lower. You could say, accurately, "pitifully lower."

This is the same trend the OC Register's Jon Lansner highlights today when he points out that sales in Orange County's beach towns were much weaker than sales in the rest of the county. The beach towns have fewer foreclosures, and thus are weighted more toward the weaker half of the market -- the non-foreclosure market.

--Peter Viles

Your thoughts? Comments? E-mail Peter Viles
Photo Credit: Laguna Beach home featured recently in Home of the Week, by George Briggs

Comments

[anonymous]

I said this in the spring. There are two different price tiers here as well. You've got poorly maintained foreclosures with the utilities off and the landscaping dead. Then you've got immaculate homes that actually have receipts for home maintenance, etc.

Many of the nice homes are being sold much out of tracking radar, so they aren't showing up as statistics, either.

I know, I sold one in May. My friend was looking for his daughter. After a month of checking out foreclosure "deals" and all the work he was going to have to do, he was disgusted. They took one look at my immaculate house and bought it.

[Inland Empire]

The last year has shown me that the foreclosures that are worth buying are prone to bidding wars, listing agents who deter sales unless you are their "friend", lots of tricks like wrong entry codes and missing keys, and other not nice things. The houses that are dumps - dead landscaping, trashed interiors etc. are selling depending on how much they need to make them liveable and if they have a decent floorplan/neighborhood.
I have no idea what "anonymous" means by out of tracking radar or not showing up on statistics. Anything that is sold is showing up SOMEWHERE. There is no secondary "mystery" market that is unknown to the general public. All sales add to the comp prices. I am sure her buyer liked her house and thought it was a good deal for his daughter.
People who have homes they wish to sell but can't are generally sitting out this market if they can.
As for me, I bought the perfectly maintained model home with every feature I was seeking for about 40% of what it sold for at the peak of the market. It had dead grass - that took all of two weeks of watering to bring back.
I will rent out my other home until the market comes back. Selling it now makes as much sense as selling everything one has in the stock market.

[anonymous buyer]

Where can I get me one of them immaculate homes at 2005 pricing? Sign me up!!!

[Rational Renter]

Gee, do you think it's maybe b/c no one can afford the non-foreclosure listings? That is not to say that if you buy a foreclosure you're getting a deal - far from it. Even the foreclosures are overpriced compared to what they'll be worth a year from now.

These are NOT two separate markets. It's one market based on a return to normal lending standards. The non-foreclosures are just priced too high to sell. It's really very simple.

[latesummer2009]

With foreclosure sales being half of the Southern California resale market, we have reached a critical point in the RE downturn. Buyers are waiting for prices to drop to more affordable prices. It is no secret anymore. Forclosure Resales will increase, while Non Foreclosure Sales decrease, as has been the pattern over the last 10 months. Buyers in ALL areas can simply afford to wait. Plain and simple.

Smart Westside buyers are on the sidelines...

http://www.westsideremeltdown.blogspot.com